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Supreme Court lets H-P/Compaq suit proceed
Class Action News | 2007/10/11 09:46

A class-action lawsuit alleging Compaq Computer Corp. sold defective computers can proceed, the U.S. Supreme Court ruled on Tuesday. Compaq, which was founded in 1982 and bought by Palo Alto-based Hewlett-Packard Co. (NYSE: HPQ) in 2002, was sued by Oklahoma residents who said the company sold defective computers and then refused to repair or replace them.

In June 2003, the state gave class-action status to the case which grew to include 1.7 million people who bought similar computers.

H-P is a major employer in Roseville.



Lawsuit accuses Mattel of insider trading
Lawyer Blog News | 2007/10/10 23:49

Attorneys for a Michigan pension fund alleged in a shareholder lawsuit filed Wednesday that Mattel Inc. has misled investors by delaying the reporting of defects in its toys to federal regulators. The lawsuit, filed in Delaware's Court of Chancery, also accuses three current members and one former member of Mattel's board of directors of engaging in illegal insider trading by dumping more than $33 million in stock before the company's massive toy recalls this summer.

Since August, Mattel has announced three separate recalls of some 21 million toys because of dangers to children from lead paint or from tiny magnets that can be harmful if swallowed.

Attorneys representing the Sterling Heights, Mich., police and fire pension fund allege that Mattel knew about the defects for months but failed to report them to the Consumer Product Safety Commission, as required by federal law. They allege that the company has withheld information about its products from the commission for years in order to prop up sales and avoid fines, thereby artificially inflating the value of Mattel's shares and breaching their fiduciary duties to shareholders.

Officials with El Segundo, Calif.-based Mattel did not immediately respond to a telephone call and e-mail seeking comment on the lawsuit.



Bush Pushes Congress on 'No Child' Law
U.S. Legal News | 2007/10/10 15:24
President Bush said that he's open to new ideas for changing the "No Child Left Behind" education law but will not accept watered-down standards or rollbacks in accountability. The president and lawmakers in both parties want changes to the five-year-old law — a key piece of his domestic policy legacy, which faces a tough renewal fight in Congress. "There can be no compromise on the basic principle: Every child must learn to read and do math at, or above, grade level," he said in a statement Tuesday from the Rose Garden that was directed at Congress and critics of the law. "And there can be no compromise on the need to hold schools accountable to making sure we achieve that goal."

The law requires annual math and reading tests in grades three through eight and once in high school. Schools that miss benchmarks face increasingly tough consequences, such as having to replace their curriculum, teachers or principals.

Earlier, Bush and Education Secretary Margaret Spellings met with civil rights leaders, educators and advocates for minority and disadvantaged students.

Almost everyone agrees the law should be changed to encourage schools to measure individual student progress over time instead of using snapshot comparisons of certain grade levels.

There also is broad agreement that the law should be changed so that schools that miss progress goals by a little don't face the same consequences as schools that miss them by a lot.

There are, however, deep divisions over some proposed changes, including merit pay for teachers and whether schools should be judged based on test scores in subjects other than reading and math.

Opponents to some of the legislative proposals come from the conservative and liberal wings of Congress.

National Urban League President Marc Morial, who was in the meeting with Bush, said the law hasn't been funded even to the levels authorized in the original legislation. But he and others did not lay the blame entirely at Bush's feet.

"Both Congress and the president should make the collective funding of this act a priority," Morial said.

Morial said he and others also talked to Bush about addressing the disparity in the amount of money committed to educating children in different parts of the country, and about strengthening a provision in the law calling for after-school services to help children who fall behind.

Bush listed several ways for enhancing the law:

_Give local leaders more flexibility and resources.

_Offer other educational options to families of children stuck in low-performing schools.

_Increase access to tutoring programs.

_Reward good teachers who improve student achievement in low-income schools.

_Expand access to advanced placement courses.

_Improve math and science instruction.

The president noted national test results released last month that showed elementary and middle schoolers posting across-the-board gains in math and more modest improvements in reading. But he also noted that nearly half of Hispanic and black students still do not graduate from high school on time.



Man Pleads Guilty to 2nd Kidnapping
Criminal Law Updates | 2007/10/10 15:20
A former pizzeria manager said Tuesday that he attempted to kill a boy he kidnapped and held captive in his apartment, but the child persuaded him not to do it.

Michael Devlin, 41, pleaded guilty to kidnapping, sexually assaulting and attempting to murder Shawn Hornbeck, and received multiple life sentences. He pleaded guilty Monday to kidnapping another boy, and is expected to enter more guilty pleas in other courts.

During Tuesday's hearing, Devlin — standing just feet away from Shawn's weeping parents — admitted in graphic detail how he abducted Shawn in 2002. He described the point at which the boy apparently turned from being an abduction victim to a captive forced to stay alive by following Devlin's horrific orders.

After Shawn was abducted at gunpoint while riding his bike in rural Washington County, Devlin took the then-11-year-old to his apartment in suburban St. Louis where he repeatedly sexually assaulted the boy. Days later, Devlin took Shawn back to rural Washington County in his pickup truck, apparently intent on killing him.

He said he pulled Shawn from his truck and began to strangle him. Shawn resisted.

"I attempted to kill (Shawn) and he talked me out of it," Devlin said.

Devlin stopped the choking, but then sexually assaulted the boy again. Prosecutors said it was at that point that Shawn told Devlin he would do whatever was asked of him in order to stay alive.

"This boy made this contract, this deal with the devil, only to survive," Washington County prosecutor John Rupp said.

Devlin kidnapped William "Ben" Ownby in January, and police who found Ben four days after he was taken were shocked to discover a 15-year-old Shawn in Devlin's apartment.

Devlin pleaded guilty Monday to one charge of child kidnapping and one charge of armed criminal action in Ben's abduction.

Prosecutors said the combined pleas mean Devlin will not be eligible for parole until he is more than 100 years old. He was sentenced to three life terms plus 60 years in prison Tuesday, in addition to a life sentence he received Monday.

Rupp said he was satisfied with the sentences Devlin received.

"You heard it from his own mouth. You've heard what kind of a monster he is," Rupp said after the hearing.

Devlin's defense attorneys and Shawn's parents declined to comment Tuesday. Devlin was expected to plead guilty later Tuesday in St. Louis County to 71 felony charges, including kidnapping and sexual assault, and was to appear in federal court in St. Louis by Wednesday.

Devlin's attorneys have said he accepted a plea deal after reviewing the massive body of evidence collected by state and federal authorities. The boys' families said they were relieved because the pleas will spare the teens from testifying and reliving the ordeal.

"Nothing good could have come from a trial," said defense attorney Michael Kielty. "The evidence ... is just absolutely overwhelming."

While it is The Associated Press' policy not to identify suspected victims of sexual abuse in most cases, the story of Shawn and Ben has been widely publicized and their names are well known.



OC Bishop Faces Contempt of Court
Court Feed News | 2007/10/10 15:10
The sexual abuse case was settled and Roman Catholic Bishop Tod Brown could have walked away without ever saying a thing about it in court. But an attempt to clear his name of allegations he helped a high-ranking church official avoid testifying has made Brown the first U.S. bishop who could face jail time in the church sex abuse scandal.

A judge began criminal contempt-of-court proceedings against Brown on Tuesday, just three days after he agreed to pay nearly $7 million to settle the lawsuits that led to contempt allegations surrounding Brown's decision to send the church official to Canada.

Before the hearing, plaintiffs' lawyers said they expected the judge to dismiss the contempt filing because the case had been settled. But Diocese of Orange attorney Peter Callahan insisted the proceedings go forward to clear the bishop's name, and Judge Gail Andler took him up on the offer.

Brown waived his arraignment, which lawyers said was the equivalent of a not guilty plea.

"This is one more example of the diocese stepping in their own mess," said John Manly, a lawyer for the plaintiffs in the case. "Now we can have our cake and eat it too."

Plaintiffs' attorneys had accused Brown of sending Msgr. John Urell to Ontario, Canada, for medical treatment before he could complete a deposition in one of four cases settled Friday. The monsignor was responsible for handling sexual abuse allegations against the diocese.

Brown testified in a pretrial deposition that he made the decision to send Urell to the Southdown Institute, although he knew Urell "had given a deposition and was going to be called back for further deposition."

He said Tuesday the facility is one of few that specializes in psychological care for clergy and because it could take him immediately.

Andler allowed attorneys to deliver their opening statements in the contempt case before postponing the rest of the hearing until Dec. 3. She said a subpoena for Urell's testimony would remain in effect until that date.

Callahan will argue at the hearing to dismiss the contempt matter.

Venus Soltan, a plaintiffs attorney, said Brown sent Urell away to suppress critical evidence about the diocese's handling of sexual abuse. Urell went away a week after he broke down during his deposition by plaintiffs' attorneys.

"When Msgr. Urell was there for half a day, he couldn't take it because he was too upset about having to testify about hiding all these allegations," she said in court. "This is plain and simply hiding the facts."

Callahan, however, said there was no evidence that a court order was in effect when Brown sent Urell away and asserted that a plaintiffs' attorney had verged on perjury in the court filings that precipitated the contempt hearing.

Urell knew nothing about the current case, which involved allegations that a lay assistant basketball coach molested a 16-year-old girl at Mater Dei High School, Callahan said.

"I was disappointed that the judge didn't rule. We were hoping that the bishop would have the opportunity to exonerate himself by telling the truth but he didn't get the opportunity," he said.

At a news conference outside court, two of the young women who were plaintiffs in the cases angrily asked Brown and his attorneys questions about how church officials handled their cases.

Brown did not respond to the questions directly, but apologized.

"To both of you, and to the other victims, all I can do is repeat once again, my sincerest and deepest and most compassionate apology on the part of the church for what happened to you, which was terrible and sinful and criminal and reprehensible," Brown said. "I'm just so very sorry it happened."

Three years ago, Brown agreed to pay $100 million to settle lawsuits from about 90 sexual abuse victims.



Supreme Court wary 3rd-party lawsuits
Lawyer Blog News | 2007/10/10 15:09
The Supreme Court voiced skepticism Tuesday about efforts to allow lawyers, accountants and others who do business with large corporations to be the targets of class-action securities suits. At issue in the high-profile case is whether victims of large-scale corporate fraud can sue third parties that may have played a significant role in the scheme. Think Enron, Global Crossing or any other massive fraud that involved a web of business relationships, where outside experts allegedly signed off on questionable corporate practices.

The Supreme Court and other federal courts have largely frowned on such suits, saying that only the Securities and Exchange Commission has the authority to bring suit against third parties as so-called aiders and abetters. But following the wave of corporate implosions, class-action suits seeking to hold those entities accountable have been on the rise, largely because those outside parties often are the only ones left standing holding any assets. Tuesday, one of those investor class-action cases reached the justices, with several suggesting they are not inclined to allow the suit to go forward.

That's a view that will be welcomed by a range of powerful business groups, including the U.S. Chamber of Commerce and the American Bankers Association. Along with the Bush administration, they warn that making third parties vulnerable to such suits would result in an explosion of securities litigation, damaging American competitiveness in the global marketplace.

The closely watched dispute is one some observers have labeled the "Roe vs. Wade" of securities law, one in which more than 30 friend-of-the-court briefs were filed, and it played to an electric atmosphere in a packed Supreme Court chamber.

While business groups largely lined up one side, such consumer advocates as AARP, the senior citizen lobby, and the Council of Institutional Investors stood with the investor plaintiffs.

"The stakes are enormous," said Jeffrey McFadden, a Washington securities lawyer who attended the arguments.

The case involves Charter Communications Inc., a cable television provider that entered into side deals with Motorola Inc. and Scientific-Atlanta Inc., two makers of set-top cable boxes. In 2000, in a scheme to pump up its revenues, Charter agreed to overpay the vendors for the boxes. The vendors then returned part of the money to Charter in the form of advertising fees, adding about $17 million to Charter's balance sheet.

After the machinations were revealed and Charter's stock price plummeted, investors brought suit against all of the parties. Charter eventually settled, leaving the two vendors in the suit.

Lawyers for the vendors argued that the companies never knew the extent of Charter's scheme to inflate its revenues and that they never made any false representations directly to Charter's shareholders, something required to find a violation of federal securities law.

A Missouri federal court dismissed the case against the vendors and the federal appeals court in St. Louis affirmed, citing Supreme Court precedent that has interpreted federal securities laws to bar private causes of action against third-parties.

Chief Justice John Roberts on Tuesday demonstrated little interest in departing from precedent, saying that Congress had clearly decided who could and could not bring suit under federal securities laws.

"We don't get in this business of implying private rights of actions anymore," Roberts said. "We haven't done it in quite some time."

And Justice Anthony Kennedy seemed to worry that once the door to such suits was opened there would be no end to them -- and that companies would simply stop doing business with publicly traded companies as a result.

"I see no limitations to your proposal," he said to the counsel for the investors, New York lawyer Stanley Grossman.

But Grossman argued that there would be no litigation free-for-all, saying that a requirement that third parties must actively participate in an intentional effort to deceive the public would eliminate most prospective actions.

Among the justices, Ruth Bader Ginsburg appeared most likely to come down on the side of the plaintiff investors. She was critical of the vendors' conduct in the case, saying it was possible they knew about Charter's plans but sat by passively. The scheme "can only work if the vendors are silent. Silence, not speech, is what counts," she said. "They set up Charter to make those statements to swell their revenues, revenues they didn't have."

Ginsburg repeatedly expressed a desire to find some sort of middle ground between barring the suits altogether and elevating third parties to the level of the primary corporate defrauders. She noted that it was unlikely the SEC could ever make fraud victims whole by suing third-parties on its own, since the government is not in a position to distribute large damage awards.

Chicago lawyer Stephen Shapiro, arguing for the defendant companies, said Congress had rewritten the securities laws in the 1990s to allow only for the SEC actions and the court needed to recognize that.


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