A Delaware federal judge on Friday tapped three firms — Grant & Eisenhofer PA, Cohen Milstein Sellers & Toll PLLC and Shepherd Finkelman Miller & Shah LLP — to lead the proposed end-payor class accusing AstraZeneca of paying off generic-drug makers to protect its brand antipsychotic drug Seroquel XR.
U.S. District Judge Colm F. Connolly named the three firms as interim co-lead counsel for the proposed end-payor class, which alleges that AstraZeneca Pharmaceuticals LP struck deals with Handa Pharmaceuticals LLC, Par Pharmaceutical Inc. and Accord Pharmaceuticals Inc., inducing the generic-drug makers to hold off on launching their versions of Seroquel XR, AstraZeneca’s prescription drug treatment for schizophrenia, bipolar disorder and depression, for five years.
In exchange, the class alleges that AstraZeneca committed to stall the launch of its own generic for six months after Handa, Par and Accord rolled out their products in late 2016.
In his order Friday, Judge Connolly said the interim co-lead counsel will be responsible for convening meetings between attorneys, briefing and arguing motions, conducting discovery proceedings, retaining experts, designating which attorneys will appear at hearings, determining the timing and substance of any settlement negotiations, approving all financial expenditures in furtherance of the litigation and overseeing all other matters concerning the prosecution or resolution of the cases.
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The consolidated proposed class actions were transferred from the Southern District of New York to Delaware after AstraZeneca, Handa and Par argued last November that only three of the eight named end-payor plaintiffs, mostly employee benefits plans, are based in New York, and none can peg the case to the state beyond generally stating that the defendants have done business there.
In arguing that the cases really belong in Delaware, the drugmakers argued New York has general jurisdiction over only Par, which purchased the rights to Handa’s generic drug application after that company settled a patent infringement case with AstraZeneca. The remaining companies, they said, are based elsewhere and their registration in Delaware makes that state the proper forum.
Had the transfer not been granted, the drug companies had asked that the August 2019 suit filed by direct purchaser plaintiff J.M. Smith Corp. be tossed, saying the distributor waited years too long to file suit and can’t even show that generic Seroquel XR would have hit the market earlier if not for the alleged reverse payment staving off competition to the drug.
The proposed end-payor class is represented by Robert G. Eisler of Grant & Eisenhofer PA, Sharon K. Robertson of Cohen Milstein Sellers & Toll PLLC and Jayne A. Goldstein of Shepherd Finkelman Miller & Shah LPP.
The complete article can be viewed here.
Flint, Michigan. Synonymous with toxic water. Sickened children. And astounding failures by public and private entities all the way up to the Governor’s office.
The city’s water crisis is also an apt illustration of the level of resources and dedication to achieving restitution and accountability that has become a hallmark of Cohen Milstein.
“I think this was very important for the residents of Flint, many of whom felt like they were not seen or heard by the very people who are there to keep them safe – their government,” says Ted Leopold, who is co-lead counsel for the class of plaintiffs who recovered $600M from the state of Michigan.
The Palm Beach Gardens, Fla.-based partner serves as Co-Chair of Cohen Milstein’s Complex Tort and Consumer Protection practices, which as always is playing a lead role in several of the nation’s most high-profile tort and environmental disputes. Leopold is also proud of his firm’s role handling business-interruption insurance cases arising from the Covid-19 pandemic.
Lawdragon: Can you describe for our readers the mix of work you do within your practice?
Ted Leopold: My work is focused on complex torts, including auto safety, managed care litigation, environmental contamination claims and consumers class actions. Many of our cases often involve novel legal issues or are nationally significant. That said, one of the things that sets Cohen Milstein apart is the level of the firm’s practice addressing these types of cases and its strong culture of collaboration, which allows every attorney to learn about cutting-edge new issues and support various litigation matters throughout the firm. As Co-Chair of the firm’s tort and consumer practices, I spend a lot of my time drawing on the deep experience and strengths of my colleagues across the firm and brainstorming new ideas to address some of our clients’ toughest challenges.
LD: Is there a recent case you can highlight for us?
TL: In August, we reached a partial $600M settlement in the Flint water crisis litigation. We are proud that nearly 80 percent of the settlement funds will go to impacted minors, with the balance for adults, property and business damages and a special education fund to support children who are suffering the long-term effects of lead poisoning. The agreement is the result of five years of litigation and 18 months of court-supervised negotiations and includes a detailed claims process that will be made available to all victims without any discrimination or favoritism.
The settlement will start to help residents of Flint who were victims of reckless decisions made by governmental officials. Sadly, the Flint community faced devastating health and property injuries as a result. While we can never undo the damage that occurred, we are pleased that we were finally able to secure this long overdue measure of justice.
A little background on the case for your readers – beginning in 2014, Flint, Mich., city and Michigan state officials, including Governor [Rick] Snyder, and engineering firms under their management, blatantly failed to provide the more than 90,000 Flint residents and businesses with safe drinking water, instead providing them with poisonous, lead-tainted water from the Flint River.
This water – which had concentrations up to 880 times the EPA’s legal limit in one instance – made its way into homes, businesses, and eventually into the bodies of Flint residents, leading to an outbreak of Legionnaires and other significant health complications, particularly in Flint’s children, who are more susceptible to long-lasting effects of lead poisoning than adults.
It wasn’t until shortly after deposing Snyder in June 2020 that the State agreed to settle. Litigation against the engineering firms and the Environmental Protection Agency is ongoing.
“Excited” and “not surprised” were the two main responses FOX 5 DC received after speaking with those connected to Howard University on Sunday morning.
Current and former students across the country and around campus are celebrating the news California Senator Kamala Harris be the first woman, the first Black and South Indian woman and the first HBCU graduate to hold the title of vice president elect.
In January, that title will change to Madam Vice President.
The District’s prestigious HBCU is partly closed this semester due to coronavirus.
It was a also weekend morning when many Howard staff and students are off.
Still, FOX 5 found plenty of people around the school’s Northwest D.C. campus buzzing about the news – and beaming with pride.
“Which is awesome!” said Lyzette Wallace, speaking of the Bison connection. However, Wallace, a Howard Law graduate, also said, “Not at all, to me surprising, at all, because I know the history that someone from Howard would make it to the White House. That’s not surprising. That’s what we should expect.”
She also was not the only one to feel this way.
“It’s nothing new for us to be proud of the people that have gone here, that have graduated here, that have gone on to do excellent things and haven’t been recognized,” said Sheryl Eaton, who was visiting campus with her husband, Eric Eaton, who is also a Howard Law grad.
“She follows a long legacy of leaders produced by Howard University as well as all HBCUs. Just to mention a few: Supreme Court Justice Thurgood Marshall, former Sen. Edward Brooke of Massachusetts,” Eric Eaton said.
Nevertheless, those connected to Howard, called it “empowering” to have the 1986 Howard University graduate – and now Vice President-Elect, Kamala Harris, put this HBCU under the world spotlight.
The acronym HBCU stands for Historically Black College and University. They’re institutions that opened their doors to young African Americans who were “once legally denied an education,” according to the National African American Museum of History and Culture web page dedicated to the history and significance of HBCUs.
View a video of the interview here.
View the complete story here.
What does former Vice President Joe Biden’s win mean for advisors? Retooled advisor regulation, potentially higher taxes for wealthy Americans and new rules governing retirement plans, experts say.
Certainly, addressing the coronavirus pandemic and economic turmoil will be top priorities for Biden. Beyond that his administration will likely pursue a more investor friendly regulatory approach, according to experts and industry observers. That would represent a sharp contrast to the Trump administration, which has generally rolled back or eased regulations that irked Wall Street.
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The SEC’s controversial Regulation Best Interest is at the top of the list for revision. The rules package, which went into effect earlier this year, changed advisor and broker standards of conduct. Critics — including the SEC’s own investor advocate — charge it tilted the playing field in favor of brokers and poorly defined what best interest means within the context of the regulation, among other criticisms. For example, the Form CRS document firms are now required to provide to clients expressly prohibits RIAs from mentioning that they are fiduciaries.
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Laura Posner, a partner at law firm Cohen Milstein and former bureau chief for the New Jersey Bureau of Securities, notes that the Democratic Party’s platform called for stronger investor protections. Without naming Reg BI, the platform said financial advisors “should be legally obligated to put their client’s best interests first.” The Republican Party did not adopt a new policy platform this year beyond stating it “will continue to enthusiastically support” President Trump’s agenda.
“They were pretty open about wanting to do something on a fiduciary rule for everyday investors. So I think they believe it is a priority,” Posner says.
Still, how a Biden administration would handle regulatory change remains an open question. Revision may not result in wholesale replacement by a Biden-appointed SEC chair.
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Retooling over replacing could be a more efficient path to significant changes, according to Posner. “If they scrap Reg BI entirely, then that is a long process of putting together new regulations, have a new comment period, and have a vote. But if they were to issue guidance on what best interest actually means, they could do that quickly,” she says.
At the Department of Labor, key Trump administration initiatives are likely due for overhaul or scrapping. Secretary of Labor Eugene Scalia, who helped vacate the Obama era fiduciary rule as a private attorney, proposed a replacement for the defunct regulation earlier this year that would align with Reg BI — which is not a fiduciary standard. The proposal and its short 30-day comment period was met with sharp criticism from fiduciary advocates and even some industry trade groups.
The Labor Department has also made moves to expand the presence of private equity in retirement plans and to restrict the use of ESG criteria even as its popularity soars. ESG investing could be an area where the Biden administration makes regulatory changes or even where Congress could get involved, according to Posner.
“You don’t want different and overlapping disclosure requirements,” she says. “I think everyone benefits from uniformity so long as it’s not a race to the bottom.”
Pacific Steel Group Alleges CMC and Danieli Corporation Schemed to Block It from Entering Market
Steel Reinforcing Bar is a Key Product Used in Commercial Construction Projects
SAN FRANCISCO—On October 30, 2020, Pacific Steel Group, a steel rebar fabricator located in San Diego, California, sued Commercial Metals Company, a multi-national steel conglomerate and the nation’s largest manufacturer and fabricator of steel rebar, in federal court in San Francisco seeking damages and injunctive relief for violations of antitrust and other laws. Pacific Steel Group (PSG) alleges that Commercial Metals Company (CMC) conspired with Danieli Corporation to prevent PSG from building a Danieli micro mill to begin manufacturing its own rebar. PSG further alleges that CMC has priced its fabrication and installation services below cost for the purpose of injuring PSG and destroying competition in violation of two California statutes.
PSG was founded in 2014 as a fabricator and installer of rebar in California. According to the complaint filed on Friday, CMC and Gerdau Reinforcing Steel, both in the rebar fabrication and installation business, responded to PSG’s entry by bidding on construction projects below cost to try to starve PSG of revenues and drive it from the market. As alleged, PSG’s more efficient operations enabled it to nonetheless win bids and establish itself in the marketplace. In 2019, PSG launched a plan to become an even more efficient competitor by building its own steel rebar mill. Such vertical integration had major cost-saving advantages for PSG, but would have created competition for CMC in rebar manufacturing, the complaint alleges. The only commercially viable way for PSG to manufacture rebar was to build a state-of-the-art, environmentally-friendly micro mill in California, according to the complaint. Micro mills are the most efficient rebar manufacturing mills in the world, and Danieli is the only company that has built them. The complaint alleges that when CMC learned of PSG’s plans, it decided to build a Danieli micro mill in Mesa, Arizona, and secured Danieli’s agreement not to build another micro mill for any competitor within a 500-mile radius of Rancho Cucamonga, California for 69 months. This agreement effectively blocks PSG and other potential competitors from manufacturing rebar for years.
“Commercial Metals Company fears competition from Pacific Steel Group and has resorted to blatant anticompetitive measures to maintain its monopoly position and reap inflated profits. The antitrust laws insist that Pacific Steel Group be allowed to engage in competition in a free marketplace for the benefit of the many commercial construction projects in California and neighboring states that use rebar,” said Daniel A. Small, a Partner at Cohen Milstein Sellers & Toll.
“CMC’s and Danieli’s tactics were clear,” said Eric Benson, Chief Executive Officer at Pacific Steel Group, “to prevent PSG from entering the rebar manufacturing market and providing construction customers a high-quality, lower-cost alternative. We look forward to proving our claims in court and ending these monopolistic practices, so that customers can benefit from the resulting competition.”
About Pacific Steel Group
Pacific Steel Group is a leading independent reinforcing steel fabricator and placer with offices throughout the Western United States. Founded in 2014 by industry veterans, PSG brings the expertise and experience of a large fabricator/installer with unparalleled independence, flexibility, and responsiveness. For additional information, visit www.pacificsteelgroup.com or call 858-251-1100.
About Cohen Milstein Sellers & Toll
Cohen Milstein Sellers & Toll PLLC is recognized as one of the premier law firms in the country handling major, complex plaintiff-side litigation. With more than 100 attorneys, Cohen Milstein has offices in Washington, D.C., Chicago, Ill., New York, N.Y., Palm Beach Gardens, Fla., Philadelphia, Pa. and Raleigh, N.C.
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Both of the firms vying for interim lead counsel spots in antitrust litigation against Fair Isaac Corp. agree that the matter ought to be split in two, but that didn’t stop aspersions from being cast as they sought to make their case before an Illinois federal court.
Cohen Milstein Sellers & Toll PLLC and Scott & Scott Attorneys at Law LLP are both hoping to secure lead counsel spots in the sprawling litigation, which accuses the company best known as FICO of monopolizing the credit score market, but for different sets of buyers.
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All the suing parties, direct and indirect purchasers alike, lay similar claims against Fair Issac. The lenders say they paid too much for the credit scores that they rely on for risk management because of the monopoly built by the credit giant, which kept competitors at bay.
The FICO credit scoring model has ruled the market for years now, its dominance so cemented that the company boasts that it sells more scores each year than McDonald’s sells hamburgers, according to a suit filed by Sky Federal Credit Union.
All three major credit bureaus rely on FICO to generate credit scores, which lenders use when deciding whether to dole out everything from home and auto loans to credit cards.
Suits began piling up after FICO revealed in mid-March that it was the subject of a U.S. Department of Justice probe aimed at uncovering whether the company had been engaging in anti-competitive conduct to maintain its market share. The court is now mulling how to consolidate those actions.
A pair of lawsuits aim to stop a HUD rule set to go into effect next week that will weaken a key fair housing tool.
Civil rights groups on Thursday filed a pair of lawsuits against the U.S. Department of Housing and Urban Development and HUD Secretary Ben Carson for weakening an Obama-era rule meant to keep lenders, landlords and insurers from discriminating.
The 2013 rule was aimed at barring the housing industry from enacting policies that, while formally race-neutral, have an adverse effect on Black and Latino Americans. These include requiring tenants to undergo a criminal-background check, prohibiting the construction of multifamily housing and using artificial intelligence to predict creditworthiness.
The rule, codifying a decades-old legal standard known as “disparate impact,” survived a 2015 Supreme Court challenge. But the Trump administration, which has consistently rolled back civil rights protections in housing and other aspects of American life, finalized a new rule in September that housing advocates say would make it harder to prove such forms of bias.
Decades of housing discrimination, including in mortgage lending, have suppressed Black homeownership and perpetuated racial economic inequality, resulting in a White-Black wealth gap of nearly 10 to 1. Applying the disparate-impact standard has helped reduce systemic inequalities, civil rights attorneys argue, by forcing lenders to originate loans based on objective criteria that do not discriminate — or face penalties.
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The new rule, housing advocates say, would allow for covert discriminatory practices by financial institutions, insurance companies and housing providers against groups protected by federal housing law: racial minorities, women, immigrants, families with children, LGBTQ people, people of faith and people with disabilities.
Under the new rule, scheduled to take effect Monday, plaintiffs bringing disparate-impact claims will have to meet a substantially higher threshold. That includes showing that a questionable policy serves no valid purpose. Previously, it was up to the defendant to come up with a justification for the policy. Plaintiffs must now also show that a specific policy or practice is the “direct cause” of any statistical disparity between outcomes for different groups.
- Two pension funds picked to lead suit, unopposed
- Cohen Milstein approved as lead counsel
Bayer AG investors secured a lead plaintiff for their California federal court suit accusing the company of misleading them about the litigation risks stemming from its purchase of Roundup maker Monsanto Co.
Two pension funds will take the lead in the would-be class suit over the multibillion-dollar settlements resulting from Roundup litigation after the U.S. District Court for the Northern District of California granted their unopposed motion for appointment.
Sheet Metal Workers National Pension Fund and International Brotherhood of Teamsters Local No. 710 Pension Fund initially faced off against two other would-be lead plaintiff groups, but one withdrew its motion and the other filed a notice of non-opposition, Judge Richard Seeborg said.
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Seeborg also approved the pension funds’ selection of Cohen Milstein Sellers & Toll PLLC as lead counsel because of the firm’s “significant experience litigating securities fraud actions, and their routine appointment as Lead Counsel by courts in this District.”
On Monday in the Northern District of California, AT&T was sued in a class-action complaint by six former AT&T workers who participate and are beneficiaries to AT&T’s Pension Plan; the suit revolves around AT&T’s alleged violations of the Employee Retirement Income Security Act (ERISA) in regards to the AT&T Pension Benefit Plan.
Specifically, the plaintiffs claimed that AT&T violated “ERISA’s actuarial equivalence, anti-forfeiture, joint and survivor annuity, and early retirement benefit requirements.” Additionally, AT&T is accused of violating the rules concerning form and payment of ERISA benefits and breaching its fiduciary duty.
According to the plaintiffs, they cannot receive their “vested accrued benefits if they retire before age 65 and/or receive their pension benefit in the form of a Joint and Survivor Annuity” because the terms of the AT&T Plan, which “reduce these alternative forms of benefits using ‘Early Retirement Factors’ and ‘Joint and Survivor Annuity Factors’ which result in Plan participants receiving less than the actuarial equivalent of their vested accrued benefit, contrary to ERISA.” Additionally, under ERISA an “employee’s right to her vested retirement benefits is a non-forfeitable”; therefore, “paying a participant less than the actuarial equivalent value of her accrued benefit results in an illegal forfeiture of her benefits.” As a result, AT&T’s Plan terms, which purportedly reduce the benefit amount to less than the actuarial equivalent violate ERISA’s anti-forfeiture requirement.
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The plaintiffs are represented by Cohen Milstein Sellers & Toll PLLC and Feinberg, Jackson, Worthman & Wasow, LLP.
Shareholder derivative and class action lawsuits serve very different ends for shareholders, but which best serve their interests
It’s not the biggest derivative suit ever settled, but it is the biggest related to diversity, equity and inclusion (DEI) initiatives, with its $310 million (€363 million) fund for instituting workplace equity and board oversight reforms. Yes, I’m talking about the latest case win for shareholders against Alphabet, Google’s parent.
And it is a derivative suit rather than a class action suit. But what is the difference between the two?
In a class action, multiple plaintiffs join a suit as a class against defendants and seek compensation for damages, typically a loss in stock value and thus investment.
In a shareholder derivative lawsuit, shareholders sue executives and the board on behalf of all shareholders. Shareholders that are not part of the class ultimately end up paying the damages to those in the class, while in a derivative suit management and directors pay the damages.
So, clearly, from an economic standpoint, derivative suits are better for all shareholders, though damages are typically lower; millions rather than billions in the largest cases.
The Alphabet suit ended mandatory arbitration in harassment and discrimination disputes across all Alphabet entities, including Google, and instituted a raft of reforms, as well as the establishment of an advisory council.
“There’s an opportunity to make governance reforms that is not present in a typical class action suit” – Julie Reiser, Cohen Milstein
And that’s the second advantage to this type of case: reforms. Not that class action cases cannot include corporate governance reforms in their settlements, they sometimes do, but their primary aim is to secure damages. In contrast, derivative suits are primarily focused on preventing the issues that led to the suit in the first place – whether these are data breaches, correct labeling of opioid drugs or sexual harassment (the three most common subjects of this type of lawsuit).
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And with derivative suits, a much broader set of reforms can be introduced than is typical with shareholder resolutions, which must be focused on a narrow issue to get past the gatekeepers at the Securities and Exchange Commission.
I spoke to Julie Reiser, partner at law firm Cohen Milstein Sellers & Toll. She led the team which won the Alphabet case as well as the derivative suit at Wynn Resorts.
While she said that class action suits represent a much more reliable source of income for lawyers, there is still a robust group of law firms that focuses on derivative actions. Figuring out whether more such suits are being brought is difficult because they are less well reported. “In the Wynn Resorts case,” she said, “the only decision that survived on demand futility [where a corporate board’s decisions and/or decision-making are challenged] with respect to the accusations got very little coverage as it was pending in Clark County, Nevada and reporters couldn’t access the pleadings and so didn’t report on the case.”
Are derivative suits more likely to be successful than class actions? “Derivative suits have a chance for prospective change that are not present in cases where shareholders are trying to recover losses or employees are seeking to recover lost wages. There’s an opportunity to make governance reforms that is not present in a typical class action suit. It feels like you are solving a problem instead of just getting paid because there was misconduct.” She added that it seemed less and less common for class action suits to propose governance reforms; something that derivative suits are more effective at achieving anyway.
Derivative case-led reforms are more likely to pass the responsibility for implementation on to the board. In Alphabet, for example, the case didn’t need to identify every single person or group of people responsible for sexual misconduct, they simply had to prove that it was an issue over which the board had ineffective oversight. “We are saying to the board, you are responsible for overseeing this,” she said, “and you haven’t done your job and now you have to clean it up and come up with a mechanism that makes you accountable going forward.”
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Are derivative suits becoming more frequent?
Reiser said that they had always been around – the stock option backdating suits in the 1990s were all derivative suits.
The question was rather, she said, whether a high stock market meant more frequent derivative suits – a question related to the fact that most class action suits are triggered by a significant stock drop.
But in many cases, she said, securities fraud cases start out as class actions and then tag-along derivative suits are filed because the initial attempt at securing a lead plaintiff position is unsuccessful.
However, some cases are just better suited for derivative litigation. For example, in the Wynn Resorts case, where the securities fraud case was unsuccessful, Reiser had a sense of investors pushing to create long-term value.
“When we were mediating the case, we had New York State and New York City [pension funds] and we had not just the legal team but also the corporate governance team.
“They were sitting across the table from the chair of the board and the general counsel and they were negotiating for what they wanted like annual elections and 10b5-1 [pre-planned stock sale] plans.
“And the mediator was thinking, you could see it in his eyes, we have experts negotiating with each other and it’s not just people trying to make money because a fraud happened.
“The investors are trying to make sure they are pushing the company to create long-term value.”
On that basis, it depends what kind of shareholder you are as to which kind of litigation is the best. If it is all about making money in the short-term, class actions are the way to go; if it is about long-term value, derivative suits are the best option.