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Wis. Supreme Court deadlocks on corporate law case
Corporate Governance | 2009/07/08 09:32

The Wisconsin Supreme Court deadlocked Tuesday on whether the former owners of a manufacturing business must pay millions in damages for enriching themselves while the company couldn't pay its bills.

The court divided 3-3 on whether to uphold a jury's decision ordering Daniel Virnich and Jack Moores to pay $6.5 million for their excessive compensation at a Lancaster company that makes stereo speaker parts.

The court divided 3-3 on whether to uphold a jury's decision ordering Daniel Virnich and Jack Moores to pay $6.5 million for their excessive compensation at a Lancaster company that makes stereo speaker parts.

Justice Patience Roggensack didn't participate in the case, which had been closely followed by corporate executives, banks and labor unions. The court's ruling sends the case back to an appeals court for a decision but avoids the central issue of what financial obligations the owners of struggling companies have to their creditors.



Six charged in $140 million NY brokerage fraud
Court Watch | 2009/07/08 09:21

Six employees of Wall Street retail brokerage Sky Capital Holdings Ltd surrendered to the FBI on Wednesday on charges of a $140 million investment fraud and stock manipulation in the United States and Britain, officials said.

The firm's founder, President and Chief Executive Officer Ross Mandell and five others were charged in a criminal indictment announced by U.S. prosecutors and parallel civil case by the U.S. Securities and Exchange Commission.

The six were charged in a two-count indictment to commit securities, wire and mail fraud for a purported scheme to defraud investors between 1998 and 2006.

Calls to phone numbers listed for the New York brokerage went unanswered or were busy.

A published overview of the company said that Sky Capital Holdings, through subsidiaries such as Sky Capital LLC, provided financial services and products for international clients. It has another subsidiary Sky Capital UK Ltd.

Until late 2006, Sky Capital's shares were traded on the Alternative Investment Market of the London Stock Exchange.

"Investor funds were substantially used to enrich the defendants and others; to pay excessive undisclosed commissions to brokers and to pay off victims who had lost money through prior purported investment opportunities," the Office of the U.S. Attorney in Manhattan said in a statement.

Apart from Mandell, other principals and employees Stephen Shea, Adam Harrington, Arn Wilson, Robert Grabowski and Michael Passaro surrendered to the FBI on Wednesday morning, FBI spokesman Jim Margolin said.

They were expected to appear in Manhattan federal court later in the day.



Appeals court rules for Abbott in AIDS drug case
Breaking Legal News | 2009/07/08 05:33

A federal appeals court has rejected a lawsuit accusing Abbott Laboratories of antitrust violations over a sudden 400-percent price hike of a popular AIDS drug.

Advocacy groups and drug benefit providers sued Abbott in 2004. They alleged the North Chicago, Ill., drugmaker raised the price of the HIV-fighting Norvir to stifle competition and boost sales of its own alternative, Kaletra.

The company paid $10 million to settle the lawsuit and agreed to let the 9th U.S. Circuit Court of Appeals still determine if the price hike was an illegal business practice.

The court ruled in Abbott's favor Tuesday. If it had lost, Abbott would have had to pay an additional $17.5 million.

A lawyer for the advocacy groups says they're weighing whether to appeal the decision.



Lear files for Chapter 11 bankruptcy protection
Bankruptcy | 2009/07/07 08:50

Struggling automotive parts supplier Lear Corp. said it has filed for Chapter 11 bankruptcy protection after receiving the support it needed from lenders and bondholders.

The company, which makes automotive seating systems and electronics, had been negotiating with its lenders and bondholders for additional support for its restructuring plan. It previously received a commitment for $500 million in loans to finance its bankruptcy from a group of lenders led by J.P. Morgan and Citigroup.

Lear said it filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Subsidiaries outside the U.S. and Canada are not part of the filings, the company said.

Lear has asked the bankruptcy court to allow it to continue to provide pay and benefits for its workers without interruption and to continue to allow it to provide payments for its U.S. and Canada pensions.

It plans to present its restructuring plan to the court within 60 days.

The Southfield, Mich.-based company's filing, which had been expected since last week, makes it the first major automotive parts maker to seek court protection since Visteon Corp., the former parts arm of Ford Motor Co., filed for Chapter 11 in May. Parts suppliers have been hammered by the recession as consumers continue to shun new car purchases and automakers slash production.

Lear's troubles stem partly from its heavy dependence on the slumping North American and European auto markets, with 36 percent of its sales coming from North America and 49 percent coming from Europe.

Lear, which posted $13.6 billion in sales for 2008, is a key supplier for both General Motors Corp. and Ford Motor Co. The pair represent the company's two largest customers and account for a combined 40 percent of its sales.

Lear is also one of Ford's key component and service suppliers, part of Ford's Aligned Business Framework, which increases the automaker's collaboration with the companies.



Lawyers' group: Sotomayor well qualified for court
Legal Business | 2009/07/07 08:49

Supreme Court nominee Sonia Sotomayor earned a "well-qualified" rating from the American Bar Association on Tuesday as she prepared for Senate hearings next week.

The ABA committee that reviewed her qualifications came out with that unanimous rating of the federal appeals court judge and released it in a letter to White House lawyer Greg Craig.

The Senate Judiciary Committee is set to begin hearings Monday on President Barack Obama's choice to replace retired Justice David Souter.

Sotomayor has been rated twice before by the ABA — as a trial judge and appellate judge.

As a U.S. District Court nominee, she was deemed "qualified" by a substantial majority of the committee and "well qualified" by a minority. The last time the ABA reviewed Sotomayor's qualifications — when she was up for the 2nd U.S. Circuit Court of Appeals — a majority rated her "well qualified," but that was not unanimous.

For more than 50 years, the ABA has evaluated the credentials of nominees for the federal bench, though the nation's largest lawyers' group has no official role in the process. Supreme Court nominees get the most scrutiny.

"The American Bar Association's unanimous, well-qualified rating of Judge Sotomayor is further evidence of the outstanding experience she will bring to the Supreme Court," said Sen. Patrick Leahy, D-Vt., who heads the Senate Judiciary Committee.

"The ABA's rating — an evaluation of integrity, professional competence, and judicial temperament — should eliminate the doubts of naysayers who have questioned Judge Sotomayor's disposition on the bench."

ABA ratings are "well-qualified," "qualified" and "not qualified." The committee's members interview hundreds of colleagues — confidentially — and scours pages of a nominee's writings before coming up with the rating.

"The ABA Standing Committee on the Federal Judiciary has completed its evaluation of the Honorable Sonia Sotomayor and is of the unanimous opinion that Judge Sotomayor is 'well-qualified' for appointment as an associate justice to the United States Supreme Court," said Kim J. Askew, the committee's head.

Chief Justice John Roberts and Justice Samuel Alito also got unanimous a "well-qualified" rating from the ABA before their Senate hearings.

White House lawyer Harriet Miers, nominated to the high court by President George W. Bush, withdrew before the ABA released its rating.

The ABA had a rocky relationship with Bush. In 2001, Bush ended the ABA's preferential role in checking prospective judicial nominees and decided the administration would not give the group advance word on names under consideration.

Conservatives had been bitter ever since the ABA's mixed review of the qualifications of failed Supreme Court nominee Robert Bork in the Reagan administration.

In March, the Obama administration asked the ABA to resume its historical role in evaluating judicial nominees.



Woman seeks to decrease $1.92M fine for downloads
Breaking Legal News | 2009/07/07 04:49

A central Minnesota woman ordered to pay $1.92 million for illegally sharing copyright-protected music is asking a federal judge to reduce the damages she must pay or grant a new trial, while the recording industry is taking steps to make sure she doesn't share music again.

Last month, a federal jury ruled Jammie Thomas-Rasset, 32, willfully violated the copyrights on 24 songs, and that she must pay $80,000 per song. In documents filed Monday in U.S. District Court, attorney Kiwi Camara argued this amount is "grossly excessive."

Camara asked that the court either remove the statutory damages from the judgment, order that the damages be reduced to the statutory minimum — which would result in a total award of $18,000 — or grant a new trial altogether.

"The plaintiffs did not even attempt to offer evidence of their actual injuries, seeking, instead, an award of statutory damages entirely for purposes of punishment and deterrence," Camara wrote, adding that the $1.92 million figure "shocks the conscience and must be set aside."

He also wrote that civil penalties must relate to a defendant's own conduct and the injury she caused to the plaintiffs. Instead, he said, it seems the damages were awarded not because what Thomas-Rasset did, but because of "the widespread and generalized problem of illegal music downloading."

Camara wrote that if a new trial isn't ordered, Thomas-Rasset would appeal based on evidence he argued should not have been allowed at trial.

This case was the only one of more than 30,000 similar lawsuits to make it all the way to trial. The vast majority of people targeted by the music industry had settled for about $3,500 each. The recording industry has said it stopped filing such lawsuits last August and is instead working with Internet service providers to fight the worst offenders.



Scientist in NYC says she's not against America
Court Watch | 2009/07/07 02:51

A U.S.-trained Pakistani scientist accused of helping al-Qaida has repeatedly interrupted her competency hearing to declare her innocence and insist she's not anti-American.

The outbursts came during a daylong hearing in federal court in Manhattan to decide whether 37-year-old Aafia Siddiqui is competent to stand trial.

She is charged with attempted murder and assault. The U.S. government says she grabbed a gun and fired at U.S. soldiers and FBI agents in Afghanistan last summer. She shouted in court Monday that she did not shoot anyone.

She also said she's not really against America and never was.

The outbursts came as psychologists testified whether she is fit for an October trial. The judge said he'll decide that later.



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