Lilly, Verizon, Philip Morris, Samsung, Ford in Court News
Eli Lilly %26amp; Co. said it received a
subpoena in November from a U.S. grand jury in Pennsylvania
seeking documents related to the marketing of the companys
best-selling drug, the antipsychotic Zyprexa.
The Indianapolis-based company is cooperating in state and
U.S. investigations into its marketing practices, according to
an e-mailed statement from a spokeswoman, Marni Lemons. The e-
mail also cited “many speculative statements in a New York
Times article Jan. 30 that said the drugmaker may pay more than
$1 billion to settle the investigation by federal and state
prosecutors.
The probe centers on marketing and promotional practices
related to the pills sales in the U.S., including communication
with doctors and the way the company paid consulting physicians
and other advisers, Lemons said in a subsequent telephone
interview. Sales of Zyprexa tablets, also used to treat bipolar
disorder, rose 9 percent to $4.76 billion last year, accounting
for about a quarter of Lillys revenue.
“We regularly have discussions with the government,
Lemons said. She didnt comment further on the Times article.
The Times, citing “several people involved in the
investigation, said in a story on its Web site that settlement
discussions with states and the U.S. government are under way,
led by the U.S. Attorneys Office in Philadelphia. A $1 billion
payment may be the largest for breaking laws on how medications
are promoted, the Times wrote.
The U.S. attorneys office in Philadelphia is “not
confirming anything in the New York Times article, said
spokeswoman Patty Hartman. Joseph Trautwein, an assistant U.S.
attorney in the Eastern District of Pennsylvania, declined to
comment in a telephone interview.
In March 2004, the U.S. attorneys office told Lilly it had
begun a civil investigation of the drugmakers marketing and
promotional practices, according to a Nov. 5 regulatory filing.
In 2005, the office told Lilly it was conducting an inquiry into
rebate agreements involving Zyprexa and other drugs with an
unnamed pharmacy benefit manager, the filing reported.
Lilly has received subpoenas from Florida, California and
Illinois on its marketing and promotional practices, according
to the filing. Thirty states have joined in an effort
coordinated by a committee of attorneys general “under various
state consumer protection laws, the filing said.
Nine states, including Alaska and Pennsylvania, have sued
Lilly, alleging improper marketing of Zyprexa for off-label
uses. The Alaska case, set to begin trial March 3 in state court
in Anchorage, is seeking a minimum of $200 million in statutory
damages, said attorney Blair Hahn, who represents the state.
Arbitrator Certifies Class Against Verizon for Termination Fees
A $1 billion lawsuit against Verizon Wireless over early
termination fees was certified as a class action by a senior
arbitrator, RCR Wireless News, a unit of Crain Communications
Inc., reported Jan. 28.
The suit, over a $175 early termination fee that could
apply to as many as 70 million class members, is the largest
class ever certified in arbitration, according to Scott Bursor,
the plaintiffs lawyer.
“It is also the largest class ever certified on a
contested motion in any type of forum, litigation or
arbitration, Bursor told the publication.
Eugene I. Farber, a former federal judge and senior
arbitrator-mediator for the American Arbitration Association in
White Plains, New York, determined that the complainants
complied with the criteria for class certification. According to
the article, Farber wrote in his 35-page opinion, “My decision
is also motivated by my conclusion that as a matter of equity
and fairness, millions of class members are entitled to
adjudication of the central common questions of fact or law in
this arbitration related to whether the $175 early termination
fee imposed by respondents Cellco Partnership d/b/a Verizon
Wireless is based upon an unenforceable liquidated damage
clause.
Nancy Stark, a spokeswoman at Verizon Wireless, said, “I
cant comment on the suit itself because its in pending
arbitration and litigation. We disagree with the certification
and we filed a motion to vacate in federal court.
For more lawsuits news from yesterday, click here.
New Suits
EU Regulators Sue Portugal Over Portugal Telecom Veto Rules
European Union regulators sued Portugal over the
governments ability to veto a sale of Portugal Telecom SGPS SA
to other telephone companies.
The European Commission said Portugals special powers at
Portugal Telecom, the countrys biggest telephone and Internet-
service provider, violate EU rules.
“The special powers constitute an unjustified restriction
on the free movement of capital and the right of establishment,
in so far as they hinder both direct investment and portfolio
investment, the Brussels-based commission said in a statement
yesterday.
The commission filed the suit at the European Court of
Justice, the EUs highest court in Luxembourg. Portugal could
face fines if the court rules against the country. The
commission has sued EU nations including Spain, the U.K. and
Italy for maintaining such special powers, known as golden
shares, in former monopolies.
Portugals government, which sold all its common shares in
the Lisbon-based company from 1995 to 2000, maintains its rights
by controlling a special class of 500 “A shares. Its powers
include the right to name a third of the board and to veto
capital increases, bond issues and dividend payments. It can
also block another telecommunications company from buying more
than a 10 percent stake.
A Portugal Telecom spokesman declined to comment. A
spokesman for Portugals Public Works Ministry wasnt available
to comment.
For more new suits news from yesterday, click here. For copies
of recent civil complaints, click here.
Trials
Former Credit Suisse Banker Didnt Tip on Deals, Lawyer Says
Former Credit Suisse Group banker Hafiz Muhammad Zubair
Naseem didnt tip a friend in Pakistan about pending deals, his
lawyer told jurors at the end of a trial over $7 million in
inside trades.
U.S. prosecutors accuse Naseem of tipping off Ajaz Rahim,
former head of investment banking for Faysal Bank Ltd. in
Karachi, Pakistan. The U.S. claims Naseem fed information to
Rahim about the $32 billion bid for TXU Corp. — later renamed
Energy Future Holdings Corp. — and eight other transactions.
“It is nothing more than trial by speculation, Michael
Bachner, Naseems attorney, told the jury yesterday in federal
court in Manhattan. “It is a trial not by evidence but by
avalanche.
Naseem didnt testify during the trial, now in its third
week. Witnesses for the government testified that Naseems
accessing of confidential documents on Credit Suisses computer
system was closely linked to phone calls he placed to Rahim and
stock trades made by the Pakistani banker.
Naseem, a Pakistani citizen who worked at the New York
office of Zurich-based Credit Suisse, faces more than 30 years
in prison if convicted.
Prosecutors argued during the trial that the tips began in
April 2006, after Naseem began working on a team of Credit
Suisse energy bankers. Other transactions involved Hydril,
Trammell Crow Co., John H. Harland Co., Energy Partners Ltd.,
Veritas DGC Inc., Jacuzzi Brands Inc., Caremark Rx Inc. and
NorthWestern Corp., the government claims.
The governments evidence that a user ID tied to Naseem
accessed confidential documents on Credit Suisses computer
system wasnt conclusive, Bachner said.
“Someone else had access to those documents, Bachner
said, adding that building records indicated that Naseem wasnt
at Credit Suisses offices when some document were accessed.
There was no proof Naseem accessed the documents from his laptop
computer, Bachner said.
The case is U.S. v. Naseem, 07-cr-610, U.S. District Court,
Southern District of New York (Manhattan).
For more trial news from yesterday, click here.
Verdicts/Settlements
Philip Morris Must Pay $79.5 Million Punitive Award, Court Says
Altria Group Inc.s Philip Morris unit must pay $79.5
million in punitive damages awarded over the death of a smoker,
the Oregon Supreme Court ruled, reinstating a judgment erased by
the U.S. Supreme Court last year.
The federal high court set aside the punitive judgment
awarded to the family of Jesse Williams, who died at 67 of lung
cancer. The court decided last February that the state trial
judge failed to provide a jury instruction that would ensure it
wouldnt punish Philip Morris for harm done to other customers.
Such punishment violated the companys right to due process, the
U.S. Supreme Court said, sending the lawsuit back to the Oregon
high court.
The jury instructions proposed by Philip Morris at trial
would have misstated Oregon law, the state supreme court said
yesterday, reinstating the verdict. The proposed instruction
would have permitted the jury to consider whether the cigarette
maker was motivated by a desire to obtain illicit profits from
misconduct rather than the profitability of such conduct,
contrary to Oregon law, the court said.
The lawsuit is Williams v. Philip Morris Inc., Oregon
Supreme Court (Salem).
Samsung Ordered to Pay $1.7 Billion of Debt From Automobile Unit
Samsung Group, South Koreas largest conglomerate, was
ordered to pay debt of 1.63 trillion won ($1.7 billion) plus
interest owed by the groups former automobile unit, which
collapsed in 1999.
The Seoul Central District Court yesterday ruled against
Chairman Lee Kun Hee and 28 Samsung units in a lawsuit filed by
Seoul Guarantee Insurance Co. and other creditors of Samsung
Motors Inc., who were seeking about 5 trillion won in
compensation.
The case is the biggest civil lawsuit in South Koreas
history and adds to the legal woes of Samsung Group, which is
under investigation for allegedly creating slush funds to bribe
government officials. Samsung Group, which accounts for a fifth
of South Koreas exports, said it will discuss yesterdays
ruling with its lawyers.
“Its a big amount, but not big enough to immediately hurt
Samsungs business, said Jang Hasung, dean of Korea
Universitys business school. “Shareholders in Samsung
affiliates wont be happy about having to share the debt burden
of a unit that doesnt even exist now.
Samsung affiliates named in the suit include Samsung
Electronics Co., Asias biggest maker of chips and mobile
phones, Samsung Heavy Industries Co., the worlds second-largest
shipbuilder, and Samsung SDI Co., the second-biggest maker of
plasma display panels.
The Samsung units must pay 1.63 trillion won and interest
equivalent to 6 percent per annum since 2001, the court said in
its ruling yesterday, without specifying a timeline for payment.
The interest amounts to about 695 billion won, according to
Seoul Guarantee.
“This is good news for banks as they will be able to
recover some of what they recorded as losses, said Koo Kyung
Hwe, an analyst at Hyundai Securities Co.
Creditors will discuss whether to appeal the ruling, their
lawyer, Kim In Man, told reporters yesterday outside the court.
Either party can appeal within two weeks.
Creditors were seeking the principal, 2.29 trillion won of
interest and penalties. Samsung Motors was sold to Renault SA of
France in 2000 and renamed Renault Samsung Motors Co.
For more verdict and settlement news from yesterday, click here.
Litigation Departments
Baker %26amp; McKenzie Litigator Named to San Diego Judgeship
Baker %26amp; McKenzies former chair of the San Diego litigation
practice group, Katherine Bacal, was appointed by California
Governor Arnold Schwarzenegger to a judgeship in the San Diego
County Superior Court, the firm said in a statement.
“Katy was not only a leader in our San Diego office, but
she has been a key member of our litigation team in North
America, where her competition law expertise and experience with
class action litigation is nationally recognized, Charles
Dick, managing partner of the firms San Diego office, said in a
statement.
Bacal had been a partner in the firms San Diego office
since 2002. She received her law degree in 1991 from the
University of Texas and her undergraduate degree in 1985 from
the University of Redlands, Johnston Center.
For more litigation department news from yesterday, click here.
On The Docket
Ford Rollover Suit Begins Today in New York Supreme Court
A trial in a Ford Explorer rollover lawsuit begins today in
Staten Island, New York. Steve Motelson, 60, and his grandson,
Brian Motelson, 11, were killed during the rollover of a Ford
Explorer in July 2000. Their family sued Ford Motor Co.,
alleging a defect in the throttle that caused the vehicle to
inadvertently accelerate.
The case is Motelson v. Ford, Supreme Court, Staten Island,
New York.
For Bloomberg articles by lawyers on litigation topics, click
here.
For news about bankruptcy litigation, click here. For news about
intellectual property litigation click here.
