Archive for the ‘Blog’ Category

A US District judge has largely dismissed the claims of a class action suit filed against Sony after an April 2011 data breach. For a month, millions of user’s personal details were compromised after hackers penetrated the defenses of Playstation Network, Qriocity.

The class action claimed the security breach of their personal data was a result of Sony’s negligence to security.

Details of the class action case

The case was brought in front of Judge Anthony Battagalia by consumers of the PSN service, who cited negligence, unjust enrichment, bailment, and violations of California consumer-protection statutes on behalf of Sony.

Judge Anthony Battagalia dismissed all of these claims in a 36-page order. He found the company did not violate any consumer-protection laws and importantly, the plaintiffs were not subscribed to the premium PSN services, and “received the PSN services free of cost”.

Sony’s Network Security

Battagalia said users should have known that Sony’s security was not “perfect”. As a large commercial company, they are open to online attacks and the breach in April 2011 was not the fault of Sony, but was the consequence of an outside criminal action.

It was also noted that the company has a comprehensive Privacy Policy that each user signed before using the service. The Policy features “clear admonitory language”. This led to the Judge also ruling out prejudice from the charges.

Future of the case

At this stage of proceedings, the plaintiffs have been given the option to amend their claims for injunctive relief and violation of consumer protection law before continuing legal action. Sony has moved to dismiss the class action.


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Every holiday season the battle for hotel offers reaches a climax. This month, however, the situation seems to have reversed due to a class action lawsuit which claims that Expedia, Hotels.com, Travelocity.com, Orbitz, Hilton, Marriott International Inc. and others conspired to fix prices of hotel rooms sold online. The suit was filed by Seattle law firm Hagens Berman and on behalf of Nakita Turik from Chicago and Eric Balk of Cedar Falls, Iowa, who both booked hotel rooms using travel websites.

Travel sites “created the illusion” that consumers could seek out the best deals, Steve Berman, an attorney for the plaintiffs, said in a statement on Monday. He went on:

“The reality is that these illegal price-parity agreements mean consumers see nothing but cosmetic differences and the same prices on every site,”

Many travel websites say they pass low hotel rates on to consumers by buying blocks of unsold rooms. But the lawsuit claims that as part of an agreement to work together, hotels set a minimum room rate that online travel websites could offer to consumers.

Hotels agree to the fixed prices for fear of losing the business brought in by online travel websites, the suit claims.

This new story comes after a very similar incident that involved the UK market. Britain’s Office of Fair Trading alleged that InterContinental Hotels Group, Booking.com and Expedia were in violation of competition law “by signing deals that limited the discounts offered on hotel rooms.”

The OFT, Britain’s Office of Fair Trading, launched an investigation into the deals between InterContinental Hotels Group and the OTAs (Online Travel Agencies) in 2010 following a complaint by the booking website Skoosh.com, which alleged it was pushed out of the market by a “Mafia-style atmosphere”. Skoosh claimed it had been “directly threatened” to stop discounting hotels on its site below the rate set by the Defendants and as a result, Skoosh was given two options: raise prices or take hotels off their list.

The future deals offered during the holiday season will show us the results of this or any other similar class actions.

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Federal securities class action activity fell in the first six months of 2012 compared with 2011, with 88 filings in the first six months of 2012, a drop of 6% from both the first half and second half of 2011, according to Securities Class Action Filings—2012 Mid-Year Assessment.

Despite the drop in CRM-related filings, filings against foreign issuers as a percentage of all filings were greater than every year since 1997, with the exception of 2011. “While the number of these non-traditional filings (i.e., CRM and M&A filings) has declined, traditional securities class-action filings have increased by 23% since the second half of 2011,” the report says.

But looking over the horizon, Grundfest (director of the Stanford Law School Securities Class Action Clearinghouse) warns that “the LIBOR-litigation industry is clearly a sector to watch for years to come. The magnitude of the potential exposures and the complexity of the underlying damages claims will likely generate large amounts of litigation activity in many geographies. Much of that litigation activity will occur away from the U.S. class-action securities fraud sector, but more lawsuits are virtually assured.”

In other class action news…..

Baja Mining announces class action proceedings

BAJA MiningBaja Mining Corp Baja has announced that class action proceedings have commenced against them under the Ontario Class Proceedings Act. Shareholder Joseph Sue-Tang has filed a class-action lawsuit claiming the company and some of its current and former directors and employees made misrepresentations from November 2010 to April 2012.

Mr Sue-Tang seeks among other relief a declaration that the defendants made misrepresentations contrary to the Securities Act (Ontario) during a class period extending from November 1, 2010 to April 23, 2012, general and special damages in the amount of $250 million, punitive damages in the amount of $10 million, interest and costs.

Baja is reviewing the claim and will defend itself against the action.

Google versus writers back in court

GoogleGoogle is starting to fight back against a class action being brought by thousands of authors claiming the search engine outfit copied their works without permission.

The class action started after Google attempted to build the world’s largest digital book library.

According to Reuters, the case has been dragging on for seven years and recently a US judge rejected a sweeping $125 million settlement of the case. Judge Denny Chin had said the settlement went too far because it gave Google a “de facto monopoly” to copy books en masse without permission and served to “further entrench” its market power in online searches.

Now Google is striking back saying that the authors have shown no economic harm from its scanning and display of their works and the creation of a searchable index to find them.

It also went on a hard sell of its services saying that authors actually benefit because the database helps people find and buy their books, and that there is a “significant public benefit” from providing access to information that might otherwise not be found.

Mercedes Benz facing fuel leak class action

MercedesA class action lawsuit was just filed in Northern Georgia against Mercedes-Benz alleging that the 2003-2009 E-Class suffers from a substantial issue with the fuel tank.

The lawsuit, which has damages that could end up well over $5 million, claims that:

“Mercedes has knowingly concealed a defect in the fuel tank assembly that poses a severe safety risk to consumers even when there is no collision or impact to the vehicle.”

Earlier this year, the National Highway Transportation Safety Administration opened an investigation into the 2003-2006 E55 AMG. According to documents online, the NHTSA alleges that the cars have defective tanks that allow fumes to seep into the cabin and liquid fuel to leak onto the ground.

Other than a 2008 recall to replace some fuel and emissions components in AMG cars, there has been no formal Mercedes recall and it appears that the investigation is still ongoing.

The big twist is that the E55 isn’t the only car named in this new suit. It’s the entire second generation E-Class range.

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Barclays - Class actionThe recent scandal involving Barclays Bank and the rigging of key inter-bank interest rates has caused outrage here in the UK. So far there have been resignations from Bob Diamond, the bank’s chief executive and their Chairman, Marcus Agius.

What lies ahead

The Libor investigation is likely to continue on two fronts in the coming months. First, the criminal investigation will focus on other banks and individuals that were contributors to Libor to determine their role in submitting false interest rate data for setting the benchmark.

The second front will be private lawsuits against the banks for manipulating Libor and its counterparts, Euribor and Tibor, for European and Japanese interest rate benchmarks. Settlements with the Justice Department require an admission of misconduct, not the more typical resolution in civil enforcement actions that come without any acknowledgment of violations. Those admissions can prove to be quite useful to plaintiffs in pursuing their own cases.

“There are thousands if not tens of thousands of entities that could possibly have a claim” – Michael Hausfeld

More banks to follow

This could just be the beginning, not just for Barclays but other leading UK and US banks. One of the biggest class-action claims has been filed in New York by the Mayor and City Council of Baltimore and the City of New Britain Firefighters and Police Benefit Fund.

Barclays is named as one of around 20 defendants, which also include RBS and HSBC, as well as US lenders Bank of America, Citigroup and JP Morgan. The action is co-ordinated with five other lawsuits, including a claim by discount brokerage Charles Schwab against 11 banks, including Barclays.

Other cities are keenly following the action. In America, 40 states allow muncipalities to enter into swap agreements. The IMF calculated the market was worth up to $500bn in 2010.

The cases are being brought under the Sherman Act, America’s anti-trust legislation, which allows for triple damage.

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Goal Group understands that PNC bank has agreed to pay $90 million to settle a class action lawsuit which accused the bank of improperly manipulating its customers’ debit card transactions in order to generate excess overdraft fee revenues.

The lawsuit, part of multidistrict litigation involving more than 30 different banks entitled In re Checking Account Overdraft Litigation, is pending before U.S. District Judge James Lawrence King in Miami.

The class action focuses on claims that the PNC Bank’s internal computer system changed the order of its customers debit card ATM transactions, by posting them in highest-to-lowest dollar amount rather than in the actual order in which they were initiated by customers and authorized by the bank.

The class action against them has shown that PNC Bank’s practice resulted in its customers being charged significantly more in overdraft fees than if the debit card and ATM transactions had been posted in the order in which they were initiated and authorized.

“This is an outstanding recovery.  We are extremely pleased to have achieved this result for PNC’s customers who were adversely affected by this anti-consumer practice,” said Robert C. Gilbert, who expects the settlement with PNC Bank to be presented to the Court for preliminary approval later this summer.

This is not the first case of an American bank being involved in a multidistrict litigation to settle similar claims. In addition to a $410 million settlement with Bank of America approved last year, settlements with JPMorgan Chase Bank, Citizens Bank and TD Bank have been announced in recent months.

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In early may Goal Group blogged about how the Centro class action case made Australian history. In the latest development The Federal Court in Melbourne has formally approved Australia’s biggest-ever settlement in a class action lawsuit, a $200 million deal for Centro shareholders, bringing to an end more than four years of complex and expensive litigation.

Yesterday, Justice John Middleton said he was satisfied that the deal, covering almost 6000 institutional and retail shareholders in two class actions, was fair and reasonable. The $200 million would be divided as follows:-

  • $67 million will be paid by Centro’s former and long-time auditing firm, PricewaterhouseCoopers, which made certain admissions about negligence in the way it handled the audit of Centro’s 2006-07 accounts.
  • The balance of $133 million will be paid by Centro-related companies. After legal costs and distributing a commission to the litigation funders, the shareholders are likely to share in a pool of just more than $120 million.
  • Lawyer Toby Borgeest, of Slater & Gordon, which represented about 5000 individual shareholders, said cheques were expected to be sent by the end of the year.
  • IMF, which funded a class action run by law firm Maurice Blackburn, confirmed to the stock exchange that it will recoup $42 million from the settlement.

Lawyer Martin Hyde, of Maurice Blackburn, said there was a lot of pressure on companies in tough economic times, and while most companies would never find themselves the subject of a class action, the settlement in Centro would send a strong message to improve corporate standards generally.

Mr Hyde said the overwhelming number of claimants in the Centro settlement were retail shareholders, although the value of superannuation funds’ claims outweighed those of smaller shareholders.

He said clients and the firm were ”absolutely delighted” with the settlement. None of the shareholders participating in the class action objected to the settlement.

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Hong-KongGoal Group understands that the Hong Kong securities regulator this month proposed introducing civil liability for banks working on initial share sale prospectuses may also allow class-action lawsuits to help investors seek damages.

Currently Hong Kong allows multiparty proceedings under rules the city’s then-chief justice Andrew Li criticized as restrictive and inadequate in 2004. Losing parties must pay all or part of their opponent’s legal fees under Hong Kong law, a deterrent for individual investors seeking damages.

As a result of this, according to Jeff Maddox, a lawyer who had advised on capital raising in Hong Kong, New York and Singapore stock exchanges, litigation risk for bankers and companies selling shares in Hong Kong has been relatively low to date.

“There’s less than a three percent chance of getting sued after a listing here compared to a 20 to 25 percent chance in the U.S.,” said Maddox, a Hong Kong-based partner at Cadwalader, Wickersham & Taft LLP, citing industry statistics.

In 2009 a sub-committee of the law commission recommended allowing class actions, following losses by thousands of investors on notes guaranteed by failed Lehman Brothers Holdings.

The need for class actions “most typically arises where a large number of persons have been adversely affected by another’s conduct, but each person’s loss is too small” to make individual litigation viable, the commission said today.

The sub-committee’s final recommendation comes two weeks after the Securities and Futures Commission (SFC), Hong Kong’s market regulator, proposed extending criminal and civil liability laws to initial share sale arrangers who sign off on misleading or inaccurate forecasts.

Buyers of products sold by consumer banks or brokerages will be allowed to seek permission to sue as a class under the proposed new regime, the law commission’s Anthony Neoh said.

Neoh also said that the proposals would have to be acted on by the government and declined to speculate on when class actions would actually be allowed or on when they would be extended to cover shareholders of publicly-listed companies.

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