In an opinion Thursday, Judge Sweet rejected a proposed settlement of a shareholder derivative case because the consideration for the settlement consisted of three corporate governance reforms that were all but meaningless, such as a commitment to vague and unspecified “training” and a commitment to maintain the same ethics code that existed all along and that apparently didn’t help prevent the underlying wrongdoing:
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This week, Judge Sweet dismissed a complaint brought by a former Fox News Latino vice president who was terminated after a Fox News contributor accused him of sexual assault.  According to the complaint, a joint statement by Fox News and the accuser published in a New York Times article — stating that Fox News took

In an opinion this week, Judge Sweet granted a permanent injunction against a film depicting the band Lynyrd Skynyrd, finding that it violated a 1988 consent order limiting the use of the band’s name and songs.  The agreement, originally overseen by Judge Sweet, was entered into by surviving family and band members from a 1977 plane crash that killed the band’s lead singer, Ronnie Van Zant, and other band members.  The film was a collaboration between Cleopatra Records and former Lynyrd Skynyrd drummer Artimus Pyle.

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Yesterday, Judge Sweet found that there was sufficient evidence to survive summary judgment regarding allegations that Bear Stearns hid material information about its lack of liquidity and other problems during the financial crisis.  He rejected the defendants’ argument that the supposedly hidden risks were “publicly known as a result of Bear Stearns’ disclosures”:

Defendants’ opposition and cited disclosures demonstrate textbook disputes of material fact sufficient to defeat a motion for summary judgment.

For example, both Plaintiff and Defendants point to a disclosure stating “inability to raise money in the long- term or short- term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on [Bear Stearns’ ] liquidity. ” Defendants frame this as sufficient disclosure to alert Plaintiff to risks, defeating the possibility of a misstatement or omission. Plaintiff emphasizes that Defendants disclosed only the possibility but not the certainty that Bear Stearns was already experiencing negative pressure as a result of its reliance on repo financing.  . . .

“Nothing short of a complete failure of proof concerning an essential element of the nonmoving part y’s case will be sufficient to award summary judgment.” Celotex Corp . v . Catrett, 477 U.S. 317, 323 (1986). The disclosures Bear has identified are not so forthright and comprehensive that it can be said no dispute of material fact exists.


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Yesterday, Judge Sweet granted in part a motion for sanctions against the City of New York and the NYPD for spoliation of evidence in a class action over the NYPD’s alleged quotas for issuing summonses even when the officers lacked probable cause.  Judge Sweet found that the City failed to implement and maintain a litigation hold which, when combined with the NYPD’s robust document destruction policies already in place, led to the destruction of key evidence.  The lack of document preservation led to little or no documents being produced for key custodians, including no emails from former Commissioner Raymond Kelly.

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This week, Judge Sweet granted the motion for class certification as part of the ongoing multi-district litigation over Facebook’s alleged negligent misstatements or omissions surrounding its 2012 IPO.  Central to the litigation are calls made by Facebook’s treasurer to underwriter analysts to revise revenue projections downward, and the extent that this information spread through the investment community prior to the IPO.  Judge Sweet certified a class of all persons who purchased Facebook stock during or traceable to the IPO on May 17, 2012, with two subclasses for institutional and individual/retail investors.

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Judge Sweet denied last week the City of New York’s request to unseal 850,000 criminal court records for putative class members in a civil rights class action against the City.  The complaint, originally filed in 2010, alleges that the City of New York and the NYPD violated the class members’ civil rights by requiring officers to meet minimum quotas of summonses issued regardless of whether a crime had occurred or probable cause existed.  The records were sealed pursuant to a privilege codified in New York’s Penal Law.  The City argued that the records should be unsealed so that defendants could identify potential class members and then seek discovery from them in order to challenge class membership.

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In a 135-page opinion issued Thursday, but made public for the first time Friday in redacted form, Judge Sweet granted the New York Attorney General’s motion to enjoin drug maker Activis from dropping a twice-a-day Alzheimer’s drug called Namenda IR, whose patent protection is about to expire, in favor of a once-a-day version called Namenda XR. The switch was allegedly motivated to prevent triggering state laws requiring pharmacists to substitute generics that are “AB-rated” to the brand name drug — i.e., have the same active ingredient, “form, dosage, strength, and safety and efficacy profile.”  These laws can cause a sharp decline in revenue when a patent expires (referred to as the “patent cliff”). As Judge Sweet explained, companies may try to avoid the “patent cliff” through a practice called “product hopping”:
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