Milton Pollack

The case involved plaintiffs in a securities class action against Merrill Lynch seeking to disqualify the presiding judge under 28 U.S.C. § 455(a) based on his financial holdings in Citigroup and Lehman Brothers, entities that were defendants in separate but related IPO litigation. The court denied the motion to recuse. It reasoned that the allegations referencing the IPO cases had already been struck from the complaint as immaterial in a prior order, rendering them irrelevant to the current action; even if considered, no privity existed between Merrill Lynch and the non-parties for collateral estoppel purposes, and the attenuated financial connection did not create an objective appearance of partiality.

procedurebusiness & regulatory

This case is a class action securities lawsuit brought by shareholders in the Merrill Lynch Internet Strategies Fund against the fund, its officers, directors, investment adviser, underwriters, and Merrill Lynch entities, alleging failures to disclose conflicts of interest between Merrill Lynch analysts and the fund's investments in internet stocks following the 2000 market downturn. The court dismissed the consolidated amended complaint in its entirety with prejudice. The core reasoning was that the claims under Sections 11 and 12(a)(2) of the 1933 Act were time-barred because news reports placed plaintiffs on inquiry notice more than one year before the April 2002 filing; defendants had no duty to disclose the omitted information; plaintiffs failed to allege recoverable losses or state a control-person claim under Section 15; and the claim under Section 34(b) of the 1940 Act lacked a private right of action and would need to be brought derivatively.

business & regulatoryprocedure

The case involved putative class action lawsuits by investors against Merrill Lynch and its analysts, claiming securities fraud in research reports that allegedly inflated stock prices during the internet bubble. The court granted the defendants' motion to dismiss the complaints with prejudice, holding that the plaintiffs failed to state viable claims under federal securities laws. The core reasoning was that the complaints did not adequately plead loss causation, as the intervening market collapse caused the losses rather than any alleged misrepresentations; the claims were time-barred due to inquiry notice from extensive public information; they lacked particularized facts showing scienter; and they failed to satisfy the pleading standards of the Private Securities Litigation Reform Act and Rule 9(b).

business & regulatoryprocedure

The case involved a shareholder of the Merrill Lynch Global Technology Fund suing the Fund, its directors, investment adviser, and Merrill Lynch affiliates, alleging that registration statements and prospectuses failed to disclose material conflicts of interest, including the Fund's investments in companies tied to Merrill Lynch's investment banking business, the use of allegedly misleading analyst research reports on those securities, and a scheme to invest in inflated stocks to benefit banking relationships rather than Fund investors. The court dismissed the claims under federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act and provisions of the Investment Company Act. It reasoned that the alleged conflicts and research practices were matters of public knowledge years earlier, the Fund's investment strategy and risks were adequately disclosed in prospectuses, and the complaint failed to adequately plead loss causation, scienter, or facts showing the investments deviated from stated criteria. The court also held there was no implied private right of action under certain ICA sections like 34(b) and 36(a).

business & regulatoryprocedure

This case involved consolidated class action lawsuits against Merrill Lynch and analyst Henry Blodget alleging that their research reports with optimistic buy ratings on internet stocks like 24/7 Real Media and Interliant were misleading due to conflicts of interest and caused investor losses after the dot-com bubble burst. The court granted the defendants' motions to dismiss the amended complaints. The ruling rested on plaintiffs' failure to meet the particularity requirements of Rule 9(b) and the PSLRA by not specifying misleading statements or loss causation, along with the lack of a viable claim under Rule 12(b)(6) since no fiduciary duty existed and losses stemmed from market conditions rather than the reports.

business & regulatoryprocedure

This case is a civil enforcement action by the SEC against former stockbroker Carol Martino, her firm CMA, her husband, and an offshore company, alleging that Martino violated a 1992 SEC bar order by associating with brokers, acted as an unregistered broker, manipulated the stock price of RMS Titanic, Inc., and attempted to conceal gains by purchasing a luxury yacht. The court granted the SEC's motion for summary judgment on all claims, finding no material factual disputes and that Martino and CMA had plainly violated the securities laws and the bar order. It rejected Martino's advice-of-counsel defense as meritless and ordered disgorgement of illegal commissions, an injunction against future violations, and turnover of the yacht to satisfy the judgment against Martino and CMA. The decision rested on undisputed evidence of Martino's post-bar brokerage activities exceeding $20 million, her role in stock manipulation through coordinated trades, and her control over the yacht purchase.

business & regulatory

The case involved a former Metro-North electrician who, after settling a FELA injury lawsuit, alleged that the railroad had orally promised during negotiations that he could return to work but then refused clearance based on medical eligibility requirements. He filed state-law claims for fraud, constructive fraud, intentional infliction of emotional distress, and breach of contract in New York state court and moved to remand after removal, while the railroad moved to dismiss. The court denied the remand motion and granted dismissal, holding that the claims were preempted by the Railway Labor Act as minor disputes because resolving them would require interpreting the collective bargaining agreement and thus fell exclusively within RLA dispute-resolution mechanisms.

labor & employmentprocedure

The case concerns the SEC's renewed motion to hold defendant Paul J. Montle in civil contempt for violating a July 2001 judgment (requiring payment of over $415,000 in disgorgement, interest, and penalties for securities fraud involving false statements and stock manipulation) as well as later orders to produce financial documents. The court granted the motion and adjudged Montle in civil contempt. It found that Montle had paid nothing despite receiving substantial monthly income, had refused document production and used a bad-faith bankruptcy filing to delay proceedings, and possessed the ability to pay at least part of the judgment through admitted assets, borrowing capacity, and expected recoveries.

business & regulatoryprocedure

The case involved a bankruptcy liquidation trust seeking to depose an attorney who had advised the directors of a now-bankrupt company on a 1997 merger transaction, in connection with claims that the directors breached their fiduciary duties. The court addressed a motion to quash the subpoena for the attorney's oral testimony, after the trust had already obtained a waiver of attorney-client privilege and conducted extensive other discovery. The court decided to quash the subpoena for deposition but permitted the trust to serve specific written interrogatories instead. The core reasoning was that while a bankruptcy trustee may waive the privilege under Supreme Court precedent, a party seeking to depose opposing counsel must first demonstrate that deposition is the only practical means of obtaining the information, which had not been shown here after the court had directed use of interrogatories.

procedurebusiness & regulatory

This case involves a motion for summary judgment in a suit by Transcontinental Realty Investors, Inc. (TCI) against the Gotham Entities under § 16(b) of the Securities Exchange Act of 1934, seeking recovery of short-swing profits from the defendants' purchases of TCI stock during a market decline and a subsequent stock option agreement with TCI affiliates. The court reviewed the background of the stock purchases following a criminal indictment of an affiliate's principal, the margin sales, and the October 2000 option agreement that allowed TCI affiliates to repurchase shares. The court decided that the option agreement did not constitute a 'sale' under § 16(b) for the bulk of the shares, granting summary judgment on that point, while finding potential triable issues of fact regarding liability on 27,700 shares that would require a trial. The core reasoning was that the transactions were unorthodox with no possibility of speculative abuse of inside information, and § 16(b) should not apply where its purpose of preventing insider trading abuses would not be served.

business & regulatory

The case involves a dispute between Morgens, Waterfall, Vintiadis & Co., Inc. and Donaldson, Lufkin & Jenrette Securities Corporation concerning alleged misrepresentations, their materiality, the plaintiffs’ reliance, and resulting damages. The court granted the defendant’s motion in limine to exclude the expert testimony of Candace L. Preston at trial. The ruling was based on the determination that the proposed testimony involved impermissible speculation not substantially connected to existing data and that the expert’s credentials did not support acceptance of the facts or conclusions proposed. The exclusion is without prejudice to a gatekeeper hearing during trial recess to reassess her status after factual testimony on the relevant issues.

procedurebusiness & regulatory

Apex Inc. sued Raritan Computer, Inc. for infringing three patents on computer switching systems that use on-screen displays to connect workstations to remote computers, seeking damages, treble damages for alleged willful infringement, and injunctive relief. Following a seven-day trial, the court found no infringement, either literally or under the doctrine of equivalents, because Raritan's MasterConsole products lacked required elements including specific interface circuits, a programmed microprocessor coupled to a first interface circuit, and analog video overlay capabilities. The court entered judgment for Raritan on the infringement claims and dismissed its cross-claims without prejudice.

business & regulatory

The case involved investors in RealTech Systems Corporation who alleged that the company and its officers made material misrepresentations and omissions about the company's 1999 financial performance and its shift from a value-added reseller business to a services business, in connection with sales of preferred and common stock totaling over $3 million. Plaintiffs brought claims under federal securities laws including Sections 12, 15, and 20(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, as well as common law fraud, breach of contract, and related state claims, seeking rescission and damages. The court granted the defendants' motion to dismiss Counts I and II but denied dismissal of the remaining claims, finding that plaintiffs had sufficiently pleaded loss causation and scienter for the surviving federal claims through specific allegations about the individual defendants' roles and knowledge, and retained supplemental jurisdiction over the state law claims.

business & regulatoryprocedure

This case was a class action by Emulex investors against news distributors Internet Wire and Bloomberg for republishing a hoax press release falsely announcing the CEO's resignation, an SEC investigation, and revised financial losses, which briefly crashed the stock price before the hoax was exposed. Plaintiffs asserted claims under securities laws based on lack of verification and recklessness but conceded the defendants had no fraudulent motive or intent to participate in the criminal hoax. The court dismissed the Second Amended Complaint with prejudice under Rules 9(b) and 12(b)(6), reasoning that the allegations failed to plead the required scienter because they did not show a strong inference of fraudulent intent or that defendants obtained concrete benefits from the false statements, as mandated by PSLRA standards and Second Circuit precedent like Novak v. Kasaks.

business & regulatoryprocedure

This case involves a class action lawsuit alleging manipulation of copper prices, where plaintiffs' counsel secured additional settlements totaling approximately $15.495 million from defendants J.P. Morgan and Credit Lyonnais Rouse after earlier settlements with other parties. The court addressed a fee petition for services rendered between July 1999 and May 2001, including time spent overcoming motions to dismiss and Rule 11 challenges while building evidence of defendants' involvement. The court awarded class counsel their full lodestar amount of $2,885,000 plus $571,274 in expenses, to be paid from the settlement fund, with 75% disbursed after settlement approval and the balance upon final distribution. The reasoning centered on the documented professional hours, the substantial risks in proving manipulation, participation, and damages, and the strong recovery for class members that exceeded typical securities fraud payouts, without applying any multipliers.

procedurebusiness & regulatory

This case was a class action lawsuit brought by holders of Emulex stock and options against Internet Wire and Bloomberg, alleging violations of federal securities laws under Section 10(b) and Rule 10b-5. The suit arose from the defendants' distribution of a fabricated press release, created by a former employee as part of a short-selling scheme, which falsely reported serious issues at Emulex and caused a sharp drop in the company's stock price before the hoax was revealed. The court granted the defendants' motion to dismiss the amended complaint pursuant to Rule 12(b)(6), holding that the plaintiffs failed to adequately plead fraud because they did not allege that the defendants made any false or misleading statement, such as a representation that they had verified the press release's authenticity. The core reasoning was that liability under Section 10(b) requires an actual false statement by the defendant, and mere republication of the release or inferences about verification do not suffice.

business & regulatoryprocedure

The case involved a petition by Wallace Rice to vacate his continuing criminal enterprise conviction on the ground that the jury was not instructed to unanimously agree on each violation in the series, as required by the later-decided Richardson v. United States. The court held that Richardson announced a new procedural rule that does not apply retroactively to cases final before it was decided under Teague v. Lane, and even if it did, any error was harmless given the petitioner's convictions on predicate narcotics charges and his admissions at trial. The motion was therefore denied.

criminal lawprocedure

In the Sumitomo Copper Litigation, plaintiffs asserted RICO and New York common law fraud claims alleging that a conspiracy artificially inflated copper futures prices on the Comex exchange between 1993 and 1996. Defendants Levett and Vincent, UK citizens living in Monaco who had served as officers of Winchester Commodities, moved to dismiss the Sixth Amended and Supplemental complaints for lack of personal jurisdiction under Rules 12(b)(2) and 12(b)(6), improper pleading amendments under Rules 15 and 21, and the statute of limitations. The court denied the motion in full, holding that New York’s long-arm statute authorized jurisdiction based on the defendants’ New York travel, business dealings, and account control tied to the alleged scheme, that a prior court order had authorized the amendments, and that fraudulent concealment tolled the limitations period until plaintiffs received inquiry notice in June 1996.

procedurebusiness & regulatorycriminal law

This case involved plaintiffs' claims under RICO and New York common law fraud against Credit Lyonnais defendants, alleging their participation in a conspiracy that artificially inflated copper futures prices on the Commodity Exchange from 1993 to 1996. The defendants moved to dismiss the complaint under Rules 12(b)(6) and 9(b) for failure to state a claim and lack of particularity in pleading fraud. The court denied the motions, holding that the plaintiffs had sufficiently alleged an association-in-fact RICO enterprise with structure distinct from the predicate acts, the defendants' participation in directing the enterprise's affairs, proximate causation of injury, and the details of the underlying scheme to meet pleading standards.

business & regulatorycriminal lawprocedure

This case involved class action claims under the Commodity Exchange Act alleging manipulation of copper prices by defendants, resulting in four settlements totaling $134.6 million (with $116.6 million designated as fee compensable). Plaintiffs' counsel, who had worked on a contingency basis amid high risks and without government assistance, petitioned for attorney fees of 27.5% of the compensable recovery plus reimbursement of over $1.8 million in expenses. The court granted the requested fees and expenses, citing the unprecedented scale of the litigation—including review of millions of documents (many in Japanese), extensive depositions, expert consultations, and resistance from defendants right up to trial—as justification for the award in this complex matter that produced the largest recovery in CEA history. The fees were to be allocated among participating firms, with 75% advanced immediately and 25% reserved until distribution to class members, and interest on the funds allocated to the class.

procedurebusiness & regulatory