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Posts Tagged ‘class action’

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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A class action typically arises when a large number of people believe they have been caused harm, or have been negatively affected by a corporation. If the defendant is well-known, the case becomes high profile in the media.

Here, we take a look at the five biggest class actions in terms of damages sought.

5. Exxon-Mobil

$5 billion (later reduced to $500 million)

In 2001, a federal judge ordered Exxon-Mobil to pay $5 billion to the thousands of people affected by the Exxon Valdez oil spill. The spill occurred in Prince Williams Sound, Alaska in March 1989 when an oil tanker struck a reef. It spilled up to the highest estimate of 750, 000 barrels of crude oil.

Billed as a considerable environmental disaster, it affected over 1,300 miles of coastline.

The $5 billion paid punitive damages and interest to workers and natives of Alaska.

4. World Com

$6.2 billion

In 2005, investors in Word Com launched a class action lawsuit. The lawsuits were aimed at the company, and employees Bernard Ebbers (CEO), Scott Sullivan (CFO), David Myers (Controller) and Buford Yates (Accounting Director).

The charges brought up were for fraud, with World Com having discrepancies in their books of over $11 billion, according to the Securities and Exchange Commission. In particular, they were seen to have inflated revenue by inputting false statements.

3. Enron

$7.2 billion

Arguably the most famous class action suit, the energy-trader collapsed at the same time as World Com, also amidst charges of fraud. Investors filed under federal and state securities laws, targeting the company and directors Jeffrey Skilling and Ken Lay.

The class action settlement was a huge $7.2 billion, the largest pay out so far in a shareholder securities action. The money was used to compensate shareholders whose stock became worthless during the company’s collapse.

2. Wal-Mart

Seeking $11 billion

Filed in 2000, this pending case involves a female employee of Wal-mart suing them under Title VII of the Civil Rights Act of 1964 for sexual discrimination. The woman claims she was denied promotion because of her gender.

Changing to a class action case, it now represents every female employee of Wal-Mart from 1998, involving tens of thousands of people.

It is the largest class action involving sexual discrimination in history,

1. Master Tabacco Settlement

$206 billion over 25 years

The largest class action settlement by far was agreed in 1998. Involving six Tabacco giants – Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporates, R.J. Reynolds Tobacco Company, Commonwealth Tobacco, and Liggett & Myers, the huge sum releases the companies from further litigation in state courts.

The lawsuits were filed under consumer protection and anti-trust laws and the money will go towards the recovery of smoking-related health care costs, and to enforce laws to reduce smoking rates in people under the age of eighteen.

This was seen as a moral victory by many, which could have long term benefits for class action settlements.

It is important to note, when a case is settled, the defendant agrees to pay damages but does not admit wrongdoing.

 

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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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Goal Group understands that a New York judge has allowed a class action case to proceed against Apple and six publishing houses, alleging a price-fixing scheme for electronic books, citing “ample” indications of a conspiracy.

The ruling came in response to a request to dismiss the case from Apple, and the publishers — HarperCollins, Simon & Schuster, Hachette Book Group, Macmillan, Penguin and Random House.

“There are ample allegations that Apple became an integral member of this conspiracy and well understood that the upshot of its participation would be the elimination of price competition at the retail level, forcing consumers to… ‘pay a little more’ for ebooks,” the judge wrote.

The Justice Department sued Apple and five publishing firms last month alleging a similar conspiracy to raise prices and limit competition for e-books. It immediately announced a partial settlement in the case.

The move almost instantly raised the prices consumers paid for e-books, to $12.99 or higher.

New documents filed in the government case suggest Jobs played a key role in the conspiracy and told one publisher in an email, “Hold back your books from Amazon” and “Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.”

Seattle attorney Steve Berman, lead counsel in the class-action suit, hailed Tuesday’s ruling saying that “We are eager to push forward with the case,” he said in a statement. In particular, he added, “We look forward to uncovering additional evidence in the discovery phase of this litigation.”

Book publishers first came under scrutiny by the Department of Justice and others in 2010, when five of the six biggest publishers moved from a wholesale pricing model to an agency model, effectively setting their own prices for e-books. The new system disrupted Amazon’s practice of charging $9.99 for most newly released and best-selling e-books.

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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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