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Posts Tagged ‘class action lawsuit’

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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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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In what has been the biggest court case of the year, Centro Retail Australia and PricewaterhouseCoopers have in principle agreed to a record class action settlement of $200 million lead by law firm Maurice Blackburn.

This long running case has centred on allegations that Centro and its former auditors engaged in misleading and deceptive conduct and breached continuous disclosure laws. The investors, some of whom lost their life savings accused Centro of misleading and deceptive conduct for not disclosing it had at least $3 billion of interest-bearing debt due within 12 months.

The actual case began more than four years ago, after the shopping centre owner and funds manager nearly collapsed under $5.7 billion of debt.

Maurice Blackburn’s class action principle Martin Hyde said “This is a very good day for Centro shareholders and a very good day for the Australian investor community generally…. We think that this sends a strong message to corporations and their advisers that they’ll be held accountable to shareholders if their conduct falls short of what the law requires”

IMF Australia, which helped fund the class action lawsuit, said the settlement complemented previous civil penalties brought against Centro’s former executives following action from ASIC.

Once legal costs have been finalised, about $150 million will go to Maurice Blackburn group members, with the remaining $50 million to go to investors represented by Slater and Gordon.

Goal Group understands that Federal Court Justice Michelle Gordon has given parties until 10.15am (AEST) on Thursday to finalise the settlement details, or the trial will resume.

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Goal Group is pleased to report that we have recovered circa $5million in the New Century Financial class action lawsuit.

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In a judgment on 30th March 2012, the Ontario Court of Appeal has upheld an earlier ruling that allows a proposed securities class action to proceed in the Canadian courts despite not relating to shares listed on a Canadian exchange.

The ruling, in Abdula v. Canadian Solar, relates to the interpretation of the Ontario Securities Act (1990) Section 138.1 as to what qualifies as a “responsible issuer”, which the Act defines as:

(a) a reporting issuer, or

(b) any other issuer with a real and substantial connection to Ontario, any securities of which are publicly traded;

As Canadian Solar is not a reporting issuer, as defined elsewhere in the Ontario Securities Act (1990), the consideration that Canadian Solar is a responsible issuer hinged on the second definition provided. Securities of Canadian Solar are publicly traded only on the NASDAQ, reporting to the United States SEC, and the principal place of business for Canadian Solar is in China; however, the company’s registered and “principal executive” offices are in Ontario, and several other business or capital-raising activities have occurred in or directly related to Ontario or its residents. The combination of these factors was ruled to be sufficient to show a “real and substantial connection to Ontario”, even though no shares are traded on a Canadian exchange.

The Ontario Court of Appeal also maintained that the potential for being sued under a foreign jurisdiction for the same alleged wrong-doing does not mandatorily restrict the case from being heard under Ontario law so long as the case falls under Ontario jurisdiction – citing the instances where securities class action cases have been heard in both the USA and Canada after falling under the jurisdiction of both territories as justification for the interpretation.

This ruling marks a sharp contrast to the Morrison v. NAB ruling by the U.S. Supreme Court, which determined a clear “transactional test” regarding whether proposed securities class actions fell under U.S. jurisdiction. While the Abdula v. Canadian Solar ruling provides for a broader basis for filing such actions in Ontario, with the potential result of making Canada increasingly popular for securities class action filings, this also potentially leads to significant overlapping with the U.S. and Canadian courts. The judgment provided for Abdula v. Canadian Solar also lacks the clarity of the “transactional test” provided in the Morrison v. NAB judgment from the U.S. Supreme Court, which may lead to further uncertainty and unpredictability as to what is considered a “real and substantial connection to Ontario”, and thus further argument as to what limits apply to the Canadian jurisdiction.

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