Last week, Judge Rakoff denied a request from the defendants in a group of Petrobras securities cases to stay a September trial date pending the Second Circuit’s consideration of an interlocutory appeal of class certification. The defendants argued that the Second Circuit appeal was on an expedited schedule, and that significant expense could be saved in the event the case had to be re-tried. The plaintiffs opposed the stay, arguing that a delay amid Brazilian political upheaval (including issues of Petrobras’ viability) would only serve to prejudice the plaintiffs.
Last week, Judge Rakoff granted Pricewaterhouse Coopers’ motion to dismiss Section 10(b) claims brought as part of the ongoing class action over an alleged bribery and kickback scheme at Brazilian oil giant Petrobras. PwC’s Brazilian member firm had served as Petrobras’ independent auditor. PwC argued that the fourth amended complaint had failed to properly allege scienter, and Judge Rakoff agreed, noting that “mere receipt of compensation and the maintenance of a profitable professional business relationship for auditing services does not constitute a sufficient motive for purposes of pleading scienter.” Plaintiffs also failed to allege any facts connecting PwC’s auditing services to “red flags” of fraud at Petrobras.
Yesterday, Judge Rakoff sanctioned an attorney for an objector to the $3 billion Petrobras securities litigation settlement (see our full coverage of the Petrobras litigation here). Judge Rakoff had approved the settlement over the objections, after which the objectors filed an appeal. According to the class plaintiff, the appeals were part of an “extortionist agenda” to extract a monetary settlement in exchange for dismissing their appeals.
Judge Rakoff warned against the rise of frivolous objections to class settlements: Continue Reading Judge Rakoff Grants Sanctions for “Objector Extortion” in Proposed Class Action Settlement
Today, Judge Rakoff rejected an attempt by the parties in the Petrobras securities litigation (see our prior coverage here) to keep parts of the settlement agreement in that case out of the public record. Judge Rakoff had previously rebuffed the parties’ request to keep parts of the settlement agreement confidential, and the parties had renewed their request in a letter to the court attaching the documents at issue. Judge Rakoff denied this request as well, and then on his own filed the documents on the court’s public docket:
From Sykes-Picot to Iran-Contra, secret agreements always have their apologists, but they rarely serve the public interest . . . . There is a certain irony in counsel for plaintiffs – who have premised their claim of fraud on defendants’ alleged failure to disclose material information – seeking to keep secret three agreements that are a material part of the settlement. While plaintiffs’ counsel states that the Court has sometimes approved such sealing in past cases, the issue was never squarely raised; and, in any event, the Court is now convinced that the parties’ and their counsels’ strategic concerns should play no role in the Court’s determination of whether or not such documents should be sealed. Rather, the Court should be guided by the basic principle that all material parts of a proposed class action settlement should be available for public review and comment. Accordingly, the Court attaches to this Memorandum Order the three documents in issue and directs the Clerk of the Court to forthwith docket this Memorandum Order and the three attachments.