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JDSU Wins Class Action Jury Verdict
Class Action | 2007/11/27 08:02
JDSU today announced that a jury has ruled in favor of the Company on all claims in a securities class action lawsuit filed by Connecticut Retirement Plans and Trust Funds against the Company in the United States District Court for the Northern District of California, Oakland, California.

"We are extremely gratified by the jury's verdict, as we have always believed that the plaintiffs' claims were without merit," said Kevin Kennedy, JDSU's President and Chief Executive Officer. "We will continue focusing our full attention on developing innovative products and delivering on the significant potential of our business model to create shareholder value."

The Company noted that while the jury's decision in this case is a significant positive milestone, it continues to defend itself in the securities class action and related litigation.



High court hears case of lost 401(k) funds
Breaking Legal News | 2007/11/27 08:01
Although U.S. workers can invest money in a retirement fund sponsored by their employer, it is not clear whether they can sue to recover money lost because of mistakes by the fund's administrator.

That issue came before the Supreme Court on Monday in a case that could shape the pension rights of 70 million employees.

The case began when James LaRue, a management consultant from Texas, said he lost $150,000 from his 401(k) retirement account when the plan's administrators ignored his instructions to move his money from a high-risk stock fund into government bonds in 2001. LaRue sued his employer, DeWolff, Boberg & Associates, but his claim was thrown out before a trial because, according to the lower courts, the federal law governing pensions and benefits does not allow individuals to sue over losses in their retirement accounts.

His case prompted the high court to reexamine the federal pension law in an era when employees -- not their employers -- are responsible for deciding where their retirement funds will be invested.

In 1974, Congress adopted federal rules for employer-sponsored pension funds and health benefits in the Employee Retirement Income Security Act. In the decades since, the high court has interpreted this worker-protection law to bar employees from suing their employers over benefit claims. For example, the court said employees and their families could not sue for damages if their healthcare plan refused to pay for a needed medical treatment.

During Monday's oral argument, the justices seemed divided over whether to allow employees like LaRue to sue over losses in their retirement funds.

Under the 1974 law, the sponsors for a pension plan who breach its trust can be sued and forced to pay for "any losses to the plan." But the lawyer for LaRue's employer said that did not refer to individual claims. It refers to "something systemic, something that affects the interests of the plan as a whole rather than just one individual participant," said Thomas Gies.

He and other business lawyers warned that opening the door to lawsuits over investment losses could prove very costly to employers -- and could even encourage some of them to drop their retirement plans.

Bush administration lawyers joined the case on the side of LaRue. They said the 1974 law was intended to protect the pensions of workers. "It is thus hard to imagine that Congress would have left participants and beneficiaries who have been injured by a breach of [trust] duties without any effective federal remedy," said U.S. Solicitor General Paul Clement in his brief to the court.

A huge sum of money is potentially at issue, Clement noted. In the first quarter of this year, so-called defined contribution plans, to which employees contribute their own money, held about $3.3 trillion in assets, according to the Federal Reserve Board.

Representing LaRue was Peter K. Stris, a law professor at Whittier Law School in Costa Mesa. He said the "plain text" of the 1974 law allows suits when trustees breach their duty, and that is what occurred in this case. This is "a make-whole remedy for . . . losses that are caused by a breach of trust," he said, not an open-ended claim for damages against the employer.

While Chief Justice John G. Roberts Jr. and Justice Antonin Scalia seemed skeptical of LaRue's right to sue, Justices David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer appeared equally skeptical of his employer's claim that no lawsuits are allowed.

And Justice Anthony M. Kennedy, who usually casts the deciding vote when the court is closely split, was uncharacteristically quiet during the hourlong argument.


Court to Consider Investor's 401(k) Suit
Breaking Legal News | 2007/11/26 08:41
James LaRue says he lost $150,000 when his instructions to his employer on where to invest money in his retirement plan were ignored. Now the Supreme Court will decide whether a federal pension-protection law gives LaRue the right to sue to recover his losses. Arguments in the case, which has far-reaching consequences, were scheduled for Monday.

LaRue, who used to work at a management consulting firm, is among the 42 million workers who contributed to a 401(k) retirement plan. At issue in LaRue's case are the limits to lawsuits under the Employee Retirement Income Security Act. It regulates private-sector retirement plans holding over $5.5 trillion in assets, including $2 trillion in an estimated quarter of a million 401(k) plans across the country.

Unlike traditional pension plans, participants in 401(k) plans — named after a section in tax law — do not know how much money they will receive in retirement. It depends on how well their chosen investments have performed.

ERISA was designed to safeguard pension fund money from misappropriation. The 1974 law followed the failure of some companies to pay promised pensions and extensive looting of some pension and welfare funds at companies and labor unions.

Class-action suits filed under the law over the past decade have targeted Enron, WorldCom and other major companies tainted by scandal.

From a legal standpoint, it is less clear what action an individual account holder can take against a retirement plan when the conduct at issue is less than criminal.

LaRue says that in 2000 and 2001 he requested changes in his investment allocations in mutual funds that were available to participants in his company's 401(k) plan. He says the requests were not honored.

"I wanted to sell stocks and move to cash because I thought the market would head down. I was right," LaRue said in a telephone interview. "I didn't find out that the plan had not executed my transactions until 10 months later. They had a substandard reporting system. I left the firm. I asked them again to make the change, and they still didn't do it. I don't know why."

The Bush administration, siding with LaRue, says an appeals court ruling against him would leave participants in "the most common form of pension plan who have been injured by a breach of fiduciary duty without a meaningful remedy from any court."

LaRue sued in 2004, saying he had tried to avoid going to court and instead sought to reach a settlement with his former employers. He was unsuccessful, as it turned out.

"We had already been through one lawsuit over stock in the company, which I won," said LaRue. "Even though I prevailed, it was not pleasant. I didn't want to go through it again."

Business groups assign a different motive to the long delay in filing the second suit, saying LaRue was waiting to see how the market performed. If the value of his investment went up, he made money. If it went down, he would head to court.

LaRue, according to the American Council of Life Insurers, was "squarely in the proverbial catbird seat. ... He could not lose. ... Granting LaRue relief in this case would encourage other plan participants to do the same."

In papers in the case, the council said denying LaRue the right to sue for damages would ensure that a plan participant who claims his investment directions were not followed would act promptly, seeking a court order if necessary.

When ERISA was passed, decisions on where to invest money were out of workers' hands. Under 401(k) and other types of plans, employees make the choice.

"If they're going to shift the responsibility for a plan from a company to the individual, then they should listen to our instructions," LaRue said.

ERISA pre-empts state laws relating to employee benefit plans, meaning LaRue cannot use them to sue, and therein lies his problem.

Besides protecting workers, ERISA was aimed at encouraging employers to set up retirement plans and in doing so, Congress limited the right to sue. Just where the line is drawn is the question in LaRue's suit, though the Supreme Court in past decisions on ERISA has drawn the line in favor of employers.

The business world says allowing cases like LaRue's could lead to a wave of suits without merit.

"There is a cost associated with any expansion of remedies," the U.S. Chamber of Commerce said in a filing in the Supreme Court supporting LaRue's former employer.

Opening up plan administrators to liability will increase the cost of running ERISA plans, result in fewer being established or reduce the level of benefits, the business group says.

The case is LaRue v. DeWolff, Boberg & Associates Inc; and DeWolff, Boberg & Associates Inc., Employees' Savings Plan, 06-856.



Court Won't Review San Diego Home Hunts
Law Center | 2007/11/26 05:42
The Supreme Court rejected a challenge Monday to a county's practice of routinely searching welfare applicants' homes without warrants and ruling out assistance for those who refuse to let them in. The justices refused, without comment, to intervene in the case from San Diego County, where investigators from the local District Attorney's office show up unannounced at applicants' homes and conduct searches that include peeking into closets and cabinets. The visits do not require any suspicion of fraud and are intended to confirm that people are eligible for government aid.

Failure to submit to the searches, which can last an hour, disqualifies applicants from assistance.

The 10-year-old program was challenged by the American Civil Liberties Union on behalf of six single parents who were seeking assistance. The welfare applicants argued that the Fourth Amendment, which prohibits unreasonable searches, protects them from the home visits.

"When the investigator conducts the home inspection, no part of the home is off-limits," they said.

The 9th U.S. Circuit Court of Appeals, upholding the program, said the Supreme Court in 1971 allowed social workers to visit homes in New York to determine eligibility. The appeals court, in a 2-1 decision, said the visits do not even constitute a search under the Fourth Amendment in part because people are free to turn away the investigators.

In dissent, however, Judge Raymond Fisher said it was unlawful for an investigator from the district attorney's office to go "walking through the applicant's home in search of physical evidence of ineligibility that could lead to criminal prosecution either for welfare fraud or other crimes unrelated to the welfare application."

The local government said the high court should not step in.

"No applicant has been prosecuted for welfare fraud based upon anything observed or discovered during a home visit that contradicted information provided by the applicant," the county said in its brief for the Supreme Court.

Eight appeals court judges voted to have the full San Francisco-based court hear the case. Seven of those judges called the program "an attack on the poor."



Court Declines Mich. Faith-Based Case
Breaking Legal News | 2007/11/26 05:41
The Supreme Court on Monday declined to get involved in a dispute between Michigan officials and a faith-based program for troubled youths. The Michigan Family Independence Agency imposed a moratorium on Teen Ranch Inc. from participating in a government-financed program for abused, neglected and delinquent children, saying the ranch coerced the 11- to 17-year-olds into religious activities.

Teen Ranch denies that it forced the young people to attend religious services, saying that it offers alternatives such as academic study time, writing letters home and recreational time in a gymnasium.

In asking the justices to take the case, lawyers for Teen Ranch say the 6th U.S. Circuit Court of Appeals in Cincinnati incorrectly expanded a 2003 Supreme Court ruling to cover Teen Ranch. In the 4-year-old ruling, the Supreme Court barred state scholarships for students studying to enter the clergy.

The appeals court decision enables bureaucrats "to discriminate against religious organizations at will," lawyers for Teen Ranch said in asking the justices to take the case.



Court Upholds Viacom Trademark Ruling
Patent Law | 2007/11/26 04:47

The Supreme Court on Monday refused, without comment, to consider an appeal by a software company that alleged MTV Networks Co. and its parent, Viacom Inc., infringed on its trademark. M2 Software Inc., which develops royalty-tracking and other software for the music industry, sued Viacom (nyse: VIA - news - people ) and MTV Networks in 1998 for allegedly infringing on its "M2" trademark by calling its second music television channel "M2: Music Television."

Viacom's lawyers said in court papers that the company dropped the M2 name in 1999 and called the channel "MTV2."

M2 Software, however, continued to press for monetary damages and a cut of Viacom's profits attributable to the trademark infringement, as allowed by federal law.

A federal district court in 2004 accepted a compromise proposal from Viacom and issued an injunction barring Viacom from using M2 or "M2: Music Television" in the future.

But the district court and the 9th U.S. Circuit Court of Appeals ruled that M2 Software wasn't entitled to damages or a portion of Viacom's profits because it hadn't shown that the infringement was intentional.

M2 Software appealed to the Supreme Court, arguing that federal law does not always require that trademark infringment be intentional for a trademark holder to seek a portion of profits.

The Supreme Court's decision lets stand the appeals court's ruling.



Levitz Auction Set For Wednesday
Bankruptcy | 2007/11/26 03:44
New York-based Levitz Furniture, which was forced into bankruptcy by a credit crunch earlier this month, could have new owners as soon as Thursday after Manhattan’s bankruptcy court approved an auction that is set for Wednesday at noon. The winning bid could be approved the following day at a sale hearing overseen by U.S. Bankruptcy Court Judge Robert Gerber.

The order came despite concerns raised by some creditors over moving to an auction just more than three weeks after Levitz filed for Chapter 11 on Nov. 8. It’s the third time since 2001 that Levitz has been in bankruptcy. In 2005, Prentice Capital acquired Levitz in a similar court auction for about $70 million. According to published reports, Levitz has struggled since that time even though more than $200 million has been put into the business by its owners and investors.

The assets for sale could include retail locations, leases, merchandise and intellectual property, and other intangibles. Court motions last week also included provisions for going-out-of-business sales. The retailer has 76 stores in the Northeast and West.

Levitz’s bankruptcy earlier this month was due to “insufficient liquidity to support the company’s current operations.” The company also said the filing was part of its strategy to evaluate its options, including a sale or finding a new financial investor.

According to court documents, the company lists assets of more than $100 million and liabilities of more than $100 million. Its estimated number of creditors is listed as being between 1,000 and 5,000.


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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet.
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