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United Rentals Takes Cerberus to Court
Court Feed News | 2007/11/19 18:08
United Rentals filed a lawsuit against Cerberus Capital Management seeking to force the private-equity firm to follow through with its buyout of the rental-equipment company.

The suit comes after Cerberus said last week that it wanted to pay a $100 million break-up fee to end the deal, partly because of volatility in the credit markets. United Rentals has contended that there are no financing obstacles to the $7 billion buyout, nor any significant changes in its business.

United Rentals said Monday that RAM Holdings and RAM Acquisition, two acquisition vehicles formed by Cerberus, are violating the merger agreement and do not have the right to simply pay the break-fee and walk away from the deal.

The company called Cerberus' action a "naked ploy" to extract a lower price for the buyout. Cerberus said last week it was willing to negotiate a revised deal.

Through the lawsuit, filed in the Delaware Court of Chancery, United Rentals is seeking to consummate the merger agreement in accordance with its original terms.

With the suit, United Rentals joins Sallie Mae in launching a legal battle with its potential acquirers to force a buyout. Other companies, such as Harman and Acxiom, have seen their deals fall apart as turmoil in the credit markets affects private-equity firms' ability to raise financing.

Shares of United Rentals recently were down 37 cents, or 1.6%, to $23. The buyout had called for Cerberus to pay $34.50 a share for the company.


CBS Asks Court to Dismiss Suit Filed by Rather
Court Feed News | 2007/11/17 17:16

CBS filed a motion yesterday seeking the dismissal of a lawsuit by Dan Rather, who says that the network violated his contract by giving him too little to do after it forced him off the evening news in 2005 and that its investigation of the news segment about President Bush’s National Guard service was politically biased.

“This lawsuit is a regrettable attempt by plaintiff Dan Rather to remain in the public eye, and to settle old scores and perceived slights, based on an array of far-fetched allegations,” the network said in a 30-page brief filed in State Supreme Court in Manhattan. The papers represented the network’s first response to the suit Mr. Rather filed on Sept. 19.

Referring specifically to Mr. Rather’s assertion that CBS and its senior executives had sought to do the White House’s bidding in commissioning an incomplete investigation of the National Guard segment, the network said: “CBS and its executives are not now, and never have been, out to get Dan Rather.”

Mr. Rather agreed to step down from the “CBS Evening News” in March 2005, a year earlier than he had planned, after the network said it could not authenticate documents that had been used as evidence in the segment about Mr. Bush’s time in the Air National Guard.

In response to arguments that CBS gave Mr. Rather insufficient airtime after he left the “CBS Evening News” — first on the weeknight edition of “60 Minutes” and later on the flagship Sunday edition — the network cited a “pay or play” clause in his contract. “As long as Rather was paid the specified compensation, CBS had no obligation to give him any on-air exposure,” the network said.

In an accompanying statement, the network called Mr. Rather “one of the most important figures in the history of journalism” and said it was “mystified and saddened” by the suit.

A spokesman for Mr. Rather’s lawyers released a statement last night that said: “It is unfortunate that CBS is trying to delay discovery of the facts and a trial of Dan’s claims. We are confident the court will reject these tactics and allow the case to go forward.”



Court Rebukes Bush Fuel Economy Plan
Court Feed News | 2007/11/16 15:23
A federal appeals court sharply rejected the Bush administration's new pollution standards 'for most sport utility vehicles, pickup trucks and vans and ordered regulators Thursday to draft a new plan that's tougher on auto emissions. The 9th U.S. Circuit Court of Appeals ruled that the National Highway Traffic Safety Administration failed to address why the so-called light trucks are allowed to pollute more than passenger cars and didn't properly assess greenhouse gas emissions when it set new minimum miles-per-gallon requirements for models in 2008 to 2011.

The court also said the administration failed to include in the new rules heavier trucks driven as commuter vehicles, among several other deficiencies found.

Judge Betty Fletcher wrote that the administration "cannot put a thumb on the scale by undervaluing the benefits and overvaluing the costs of more stringent standards."

Charles Miller, a Justice Department spokesman, said the administration was in the process of reviewing the decision. "We will consider all of our options," he said.

California and 10 other states, two cities and four environmental groups sued the administration after it announced the new fuel economy standards last year.

"It's a stunning rebuke to the Bush administration and its failed energy policy," California Attorney General Jerry Brown said.

The court ordered the administration to draw up new rules as soon as possible, but automakers complained Thursday they're already deep into developing light trucks through 2011 based on the new standards.

"Any further changes to the program would only delay the progress that manufacturers have made toward increasing fleet-wide fuel economy," said Dave McCurdy, president and chief executive of the Alliance of Automobile Manufacturers. McCurdy said the industry is dedicated to developing more fuel efficient automobiles, "but adequate lead time is necessary in order to fully integrate these technologies into the marketplace."

Former Transportation Secretary Norman Mineta announced to much fanfare the new rules in March 2006, proclaiming they were the "most ambitious fuel economy goals" yet for SUVs and their ilk. Mineta called the plan "pragmatic," balancing fuel conservation against auto industry costs and jobs.

The standards required most passenger trucks to boost fuel economy from 22.5 mpg in 2008 to at least 23.5 mpg by 2010. Passenger cars are required to meet a 27.5 mpg average.

"The idea of raising vehicle efficiency 1 mile per gallon is pathetic and shocking," said Brown, who along with Gov. Arnold Schwarzenegger is suing the Bush administration over its refusal to act on California's fuel economy plan for cars in the state.

The court ordered the White House to examine why it continues to consider light trucks differently than cars. Regulators made a distinction between cars and light trucks decades ago when most trucks were used for commercial purposes.

NHTSA had argued that it considered the intent of the manufacturer in making light trucks, rather than their actual highway use, in developing the new fuel standards.

"But this overlooks the fact that many light trucks today are manufactured primarily for transporting passengers," Fletcher wrote for the three-judge panel.

Fletcher also wrote that the administration failed to consider the benefit to reducing greenhouse gas emissions.

"It did, however, include an analysis of the employment and sales impacts of more stringent standards on manufacturers," Fletcher wrote.

The court also took the administration to task for refusing to include in the new standards trucks weighing more than 8,500 pounds, a class that includes the Hummer H2, Ford F250 and other popular large vehicles.

The court ordered NHTSA to develop fuel standards for these large trucks or give a better reason than the agency's argument that it has never regulated those large trucks and that more testing needs to be done.

"This historic ruling vindicates our fight against fuel economy standards that are a complete sham and a gift to the auto industry," said Connecticut Attorney General Richard Blumenthal, who also joined the lawsuit.

Along with California and Connecticut, plaintiffs in the lawsuit filed last year include Maine, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, New York City, the District of Columbia and several environmental groups.



Appeals court upholds convictions of Tyco executives
Court Feed News | 2007/11/16 12:26

Their names became shorthand for corporate greed, but former Tyco International Ltd. executives L. Dennis Kozlowski and Mark Swartz have argued they were entitled to the money and perks they were accused of taking. A state appeals court said Thursday it disagreed, upholding the 2005 convictions of ex-CEO Kozlowski and former finance chief Swartz. Their massive theft and purchases of such luxuries as a $6,000 shower curtain came to symbolize corporate excess and cupidity.

"The evidence amply supports the conclusion that defendants took unauthorized bonuses from Tyco in 1999 and 2000," the appeals panel wrote in a 4-0 decision.

Kozlowski, 60, and Swartz, 47, were each sentenced to 8-1/3 to 25 years in prison after being convicted of conspiracy, grand larceny, securities fraud and falsifying business records. Prosecutors say the two amassed $170 million in unauthorized compensation and $430 million through stock manipulation.

The men used the money to finance lavish lifestyles that, in Kozlowski's case, included a $6,000 gold-threaded shower curtain and a $15,000 umbrella stand shaped like a small terrier, according to the prosecution.

Last month, defense lawyers argued before the appellate judges that neither man had taken money _ including bonuses and forgiven loans, money for investments, expensive real estate and personal luxuries _ that he was not due.

During the trial, Kozlowski and Swartz argued that one member of the company's compensation committee had approved some of the bonuses.

But the judges cited testimony showing that all but one compensation committee member had no knowledge of the bonus payments, and that even the defense agreed that only the whole committee had the authority to grant compensation.

The court also noted there was no written record of the payouts in the materials prepared for the compensation committee, and none in the committee's reports to the board.

"The absence of any reference to these transactions in the chain of documentation available to the committee clearly demonstrates defendants' coverup of their thievery," the appellate judges wrote.




Court orders White House to preserve e-mail backups
Court Feed News | 2007/11/13 15:18
A federal district court judge issued a temporary restraining order today requiring the Bush administration to safeguard backup media files that may contain copies of millions of White House e-mail messages — the subject of ongoing litigation.
Citizens for Responsibility and Ethics in Washington (CREW), a watchdog group, requested the order last month. It and George Washington University’s National Security Archive are suing the Bush administration for allegedly failing to “recover, restore and preserve certain electronic communications created and/or received within the White House.”

The complaint alleges that since 2003 the Bush administration has illegally discarded about 5 million e-mail messages that it was required to keep under records laws. The plaintiffs are demanding that the missing messages be restored using the backup media files and that the administration implement a new “adequate electronic management system.”

The groups’ lawsuits against the Executive Office of the President, the White House’s Office of Administration, and the National Archives and Records Administration have now been consolidated.

CREW filed for the temporary restraining order after the group said it did not receive adequate assurances from the White House that the backups were being protected.

The decision by the U.S. District Court for the District of Columbia confirms a magistrate’s earlier recommendation that the order be issued. Under the temporary restraining order, the defendants are required to safeguard all media in their possession as of Nov. 12.

But because the order is not retroactive, it does not clarify what has happened to the backups since 2003, said Meredith Fuchs, the National Security Archive’s general counsel. Concerns that the backups could have been erased in the past four years -- perhaps as part of normal business processes -- coupled with the limited time remaining for the Bush administration prompted the plaintiffs to ask for an expedited discovery process, she said.

The Bush administration formally opposed the early discovery request Nov. 9, she said.


Court Rejects Request From Detainee
Court Feed News | 2007/11/13 14:19
The Supreme Court on Tuesday refused to consider the case of a Guantanamo Bay detainee fighting U.S. plans to return him to Algeria. Ahmed Belbacha says his life will be in danger from terrorists and that it is likely Algerian authorities will torture him if he is sent home. The U.S. military has classified him as an enemy combatant, while saying he is eligible for transfer subject to appropriate diplomatic arrangements for another country to take him.

"Caught between domestic terror groups and a government that brutalizes suspected Islamists, Belbacha cannot safely return to Algeria," his lawyers wrote in asking the Supreme Court to take the case. "His fear is such that he would prefer to endure the oppressive environment of Guantanamo until an asylum state can be found."

Brought to Guantanamo Bay in 2002 from Pakistan, Belbacha was an accountant at the government-owned oil company Sonatrach. He says his problems began when he was recalled for a second term of military service in the Algerian army, prompting death threats against him by terrorists in Groupe Isalmique Armee, then at the height of a violent campaign for an Islamic Algeria.

Belbacha never reported for duty, but says the GIA visited his home at least twice and threatened him and his family. He left the country, traveling to France, England, Pakistan and Afghanistan before being brought to Guantanamo Bay.



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