Milberg

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Milberg LLP (formerly known as Milberg Weiss LLP and Milberg Weiss Bershad & Schulman LLP) is a US plaintiffs' law firm, established in 1965 and based in New York City. It has mounted many class action cases on behalf of investors, and has been recognized as among the leading firms in its field by the National Law Journal, RiskMetrics Group, and Law360. The firm and some of its partners were charged in 2006 with offering improper inducements to plaintiffs. The case against the firm itself was dismissed in 2008, but that same year four partners pleaded guilty to charges, and many others had already left the firm.

Founding and history[edit]

Melvyn Weiss convinced his partner, Lawrence Milberg, to fund class-action securities litigation against Dolly Madison Industries. Dolly Madison acquired at least 30 companies over an 18-month period. Dolly Madison was allegedly facilitating these deals by falsifying its balance sheet to artificially increase its stock price. Weiss and Milberg thought they could win a large payout from Dolly Madison's accounting firm, Touche Ross and Co., a "big eight" firm in the 1960s. Like most defendants in class actions, Dolly Madison delayed as long as possible and the case did not go to trial until 1973. Shortly before a verdict was rendered Touche settled for $2 million, resulting in a $500,000 fee for Milberg.[1]

Before its split in May 2004 with the firm now known as Robbins Geller Rudman & Dowd LLP, it was the largest plaintiff law firm in the United States, with over 200 attorneys, responsible, at least in part, for over 50 percent of all securities class action cases settled in 2002.[2]

Recent cases[edit]

Milberg was co-lead counsel in a securities fraud class action case against French conglomerate Vivendi. After nearly eight years of litigation, the case was tried to a jury for three months in late 2009, and resulted in a verdict for plaintiffs in January 2010. The jury found Vivendi liable for 57 false or misleading class period statements. Even with claimants who made foreign purchases removed from the class after the Supreme Court’s Morrison v. National Australia Bank Ltd decision, total damages claims exceeded $1 billion.[3]

On August 24, 2011, the U.S. District Court for the Southern District of New York approved a $180 million settlement to resolve antitrust claims brought by a class of consumers, represented by Milberg, against Sirius XM Radio. The case stems from the 2008 merger between Sirius Satellite Radio, Inc. and XM Satellite Holdings, Inc. that created Sirius XM, now the nation’s only satellite radio company. The plaintiffs alleged that the merger of the only two U.S. satellite radio providers was an illegal move to eliminate competition and monopolize the satellite radio market.[4]

Milberg represented a healthcare worker in a whistleblower suit against his former employer Medline Industries, Inc., along with its charitable arm, The Medline Foundation. The Firm negotiated an $85 million settlement on behalf of the federal government, announced on March 11, 2011. The suit was filed under the False Claims Act (“FCA”), which allows private citizens to sue companies that are defrauding the government and to receive an award for their efforts when the case is successful. Although a party to the settlement agreement, the U.S. Department of Justice chose not to intervene in the lawsuit. Milberg pursued the case and obtained one of the largest settlements of an FCA case in which the government declined to intervene.[5][6]

In 2010, Milberg won a victory before the United States Supreme Court, which issued a decision (Merck & Co., Inc. v. Reynolds) addressing when an investor is placed on “inquiry notice” of securities fraud violation sufficient to trigger the statute of limitations under 28 U.S.C. § 1658(b).[7]

Other milestones in the Firm’s history include its involvement in the "US Financial" litigation in the early 1970s, one of the earliest large class actions, which resulted in the $50 million recovery for purchasers of the securities of a failed real estate development company; Other cases included the Ninth Circuit decision in Blackie v. Barrack[8] in 1975, which established the fraud-on-the-market doctrine for securities fraud actions; the Firm’s co-lead counsel position in the In re Washington Public Power Supply System (WPPSS) Securities Litigation,[9] a seminal securities fraud action in the 1980s in terms of complexity and amounts recovered; the representation of the Federal Deposit Insurance Corp. in a year-long trial to recover banking losses from a major accounting firm, leading to a precedent-setting global settlement; attacking the Drexel-Milken “daisy chain” of illicit junk-bond financing arrangements with numerous cases that resulted in substantial recoveries for investors;[10] and representing life insurance policyholders defrauded by “vanishing premium” and other improper sales tactics and obtaining large recoveries from industry participants. Milberg’s attorneys also argued another important case in 2007 before the high court in Tellabs Inc. v. Makor Issues & Rights Ltd.[11]

Recoveries[edit]

CASE RESULT
In re Tyco International Ltd. Securities Litigation (D.N.H.)[12] Milberg served as co-lead counsel in this litigation, which involved federal securities claims against Tyco and its former CEO, CFO, general counsel and certain former directors arising out of alleged insider trading and the overstatement of billions of dollars in income. In 2007, the court approved a record $3.2 billion settlement that was recovered from Tyco and its auditor PricewaterhouseCoopers.
In re Nortel Networks Corp. Securities Litigation (S.D.N.Y.)[13] Milberg served as lead counsel for the class and the court-appointed lead plaintiff, the Trustees of the Ontario Public Service Employees’ Union Pension Plan Trust Fund in this federal securities class action. In January 2007, the court approved a settlement valued at more than $1.14 billion.
Carlson v. Xerox, No. 00-1621 (D. Conn.)[14] Milberg served as plaintiffs’ co-lead counsel in these consolidated cases alleging that Xerox and several officers violated the federal securities laws by issuing false financial statements. Plaintiffs’ claims survived three motions to dismiss and a motion for summary judgment, ultimately resulting in a $750 million settlement in 2009. It ranked among the largest recoveries in securities litigation history.
In re Initial Public Offering Securities Litigation, No. 21-92 (S.D.N.Y.)[15] Milberg represented investors in 310 securities class actions alleging a market manipulation scheme involving hundreds of initial public offerings and approximately 55 defendant investment banks. As a member of the court-appointed liaison counsel, Milberg oversaw the efforts of approximately 60 plaintiffs’ firms and helped in the recovery of a $586 million settlement.
Lucent Technologies, Inc. Securities Litigation, No. 00-621 (D.N.J.)[16] Milberg served as co-lead counsel in this securities action, which alleged that Lucent and its senior officers misrepresented the demand for Lucent’s products and improperly recognized hundreds of millions of dollars in revenues. The case resulted in a $600 million settlement.
Raytheon Co. Securities Litigation, No. 99-1349 (E.D. Pa.)[17] Milberg served as lead counsel in this case, which alleged that a major defense contractor failed to properly write down assets on construction contracts. In 2004, Raytheon and its auditor, PricewaterhouseCoopers LLP, settled the case for a total of $460 million.
In re Sears Roebuck and Co. Securities Litigation (N.D. Ill.)[18] This case involved allegations that Sears concealed material adverse information concerning the financial condition, performance, and prospects of Sears’ credit card operations, resulting in artificially inflated stock prices. Class action resulted in a $215 million settlement in 2007.
In re CMS Energy Securities Litigation (E.D. Mich.)[19] $200 million was recovered for purchasers of CMS stock in securities class action alleging failure to disclose “round-trip” trading of energy contracts. Milberg served as co-lead counsel for the class.
In re Biovail Corp., Securities Litigation (N.D.N.Y.)[20] Milberg, serving as co-lead counsel, achieved a $40 million settlement on behalf of current and former G.E. employees who claimed that G.E.’s 401(k) Plan fiduciaries imprudently invested more than two-thirds of the Plan’s assets in company stock. The settlement included important structural changes to G.E.’s 401(k) plan valued at more than $100 million.
Managed Care Litigation (S.D. Fla.)[21] Recoveries of over $1 billion and major changes in HMO practices of CIGNA Healthcare and Aetna. The settlement stems from a series of lawsuits by physicians and medical associations alleging that insurers engaged in a scheme to obstruct, reduce, delay, and deny payments and reimbursements to health care providers.
In re Washington Public Power Supply System Securities Litigation (D. Ariz.)[22] A massive securities fraud litigation in which Milberg served as co-lead counsel for a class that obtained, after several months of trial, settlements totaling $775 million, the largest ever securities fraud settlement at that time.
NASDAQ Market Makers Antitrust Litigation (S.D.N.Y.)[23] In the largest antitrust settlement in history, $1.027 billion was obtained in 2007 for plaintiffs who alleged that market-makers conspired to set and maintain wide spreads in securities transactions.

Recognition and rankings[edit]

In 2009, 2010 and 2011, The National Law Journal included Milberg in its “Plaintiffs’ Hot List.”[24][25][26]

Criminal charges[edit]

On May 18, 2006,[27][28] the firm and two of its named partners, David J. Bershad and Steven G. Schulman (Schulman resigned in December 2006), were indicted by United States Attorney Debra Wong Yang of the United States District Court for the Central District of California on various counts, including racketeering, mail fraud, and bribery. The charges include claims that Milberg Weiss paid portions of its legal fees to plaintiffs in order to induce them to sue.[29][30] By January 2007, more than half of the firm's partners had left the firm. As of June 2008, the firm's website lists only 53 full-time attorneys (29 partners and 24 associates).

On June 16, 2008, U.S. prosecutors in Los Angeles dismissed the indictment against the firm, under a non-prosecution agreement, and a statement by the government that “no attorney currently a partner or associate with Milberg LLP is criminally culpable” with respect to conduct charged in the indictment. Milberg agreed to pay $75 million to settle the charges.[31]

However, four longtime Milberg Weiss partners pleaded guilty to federal charges, including Steven Schulman, David Bershad, William Lerach, and Melvyn Weiss. Melvyn Weiss pleaded guilty in exchange for an 18- to 33-month prison sentence and fines and restitution of $10 million.[32] Lerach was sentenced to two years in federal prison, two years' probation, fined $250,000 and ordered to complete 1,000 hours of community service. Bershad paid $250,000 in fines and forfeited $7.75 million. Bershad was sentenced to six months of incarceration in October 2008.[33] Weiss was sentenced to 30 months of incarceration on Monday June 2, 2008.[34] He was released in February 2010. Bershad was released from custody on July 2, 2009, and Schulman was released on July 10, 2009. Lerach was released on March 8, 2010.

See also[edit]

References[edit]

  1. ^ Coffee, John (2015). Entrepreneurial Litigation. Cambridge, Massachusetts and London, England: Harvard University Press. ISBN 9780674736795. 
  2. ^ 1995–2003 Securities Settlements Review (pdf)
  3. ^ "Vivendi Wins Ruling Limiting Class-Action Fraud Verdict (2)". Bloomberg. February 22, 2011. 
  4. ^ http://businesslawdaily.net/2011/08/26/judge-approves-sirius-settlement/ “Judge Approves Sirius Settlement”
  5. ^ "Medline settles Medicare kickback case for $85 mln". Reuters. March 11, 2011. 
  6. ^ http://www.lawyersandsettlements.com/articles/qui-tam-whistleblower-government-fraud/interview-qui-tam-whistleblower-lawsuit-8-16329.html
  7. ^ "Merck & Co., Inc. v. Reynolds - SCOTUSblog". SCOTUSblog. 
  8. ^ United States Court of Appeals, Ninth Circuit (31 December 1969). "524 F2d 891 Blackie v. Barrack Ampex Corporation". 
  9. ^ "Banken und Finanzprodukte im Vergleich - BankVergleich.com". BankVergleich.com (in German). 
  10. ^ "Master File No. C-05-1219 MMC" (PDF). SCAC | Securities Class Action Clearinghouse. 
  11. ^ [1]
  12. ^ Associated Press, “Lawyers get 14.5 percent in Tyco Case, $29 million in expenses,” Dec. 20, 2007.
  13. ^ Larry Neumeister,“U.S. judges approves Nortel Networks global settlement,” Associated Press, Dec. 26, 2007.
  14. ^ National Law Journal, “Firms to Watch -- Plaintiffs’ Hot List,” Oct. 5, 2009.
  15. ^ Glovin, David, “Banks to Settle Internet IPO suit for $586 million,” Bloomberg, June 11, 2009.
  16. ^ Bloomberg, “Lucent Reaches $568 Million Settlement of Investor Suit,” Mar. 27, 2003.
  17. ^ Associated Press, “Raytheon Settles Stockholder Lawsuit,” May 14, 2004.
  18. ^ PRNewswire, “Sears Roebuck Agrees to Settle Class Action Securities Litigation,” May 18, 2006.
  19. ^ Polson, Jim, “CMS to Settle Shareholder Lawsuits for $200 Million,” Bloomberg, Jan. 5, 2007.
  20. ^ Glovin, David, “Biovail Wins Approval of $138 Million Lawsuit Settlement,” Bloomberg, Aug. 8, 2008
  21. ^ Boomberg, “Aetna to Pay $170 Million to Settle Class-Action Suit,” May 22, 2003.
  22. ^ Cronin-Fisk, Margaret, “Ten Largest Securities Settlements Total $10.1 Billion, Study Says,” Bloomberg, Mar 7, 2005.
  23. ^ Reuters, “Court Approves Nasdaq Brokers’ Settlement,” Apr 23, 1997.
  24. ^ http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202434298142 The 2009 Plaintiffs’ Hot List
  25. ^ http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202472789375 2010 Plaintiffs' Hot List
  26. ^ http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202517530090
  27. ^ Milberg Weiss Is Charged With Bribery and Fraud, Julie Creswell, The New York Times, May 18, 2006.
  28. ^ U. S. Department of Justice press release.
  29. ^ Peter Elkind (November 3, 2006). "The fall of America's meanest law firm: Milberg Weiss, the lawsuit factory that took corporations for $45 billion, is in the feds' cross hairs.". Fortune. …Milberg Weiss and the two outsized personalities who ruled the place, Mel Weiss and Bill Lerach… has been indicted for allegedly paying three plaintiffs $11.4 million in illegal kickbacks in about 180 cases spanning 25 years - and then repeatedly lying about it to the courts. 
  30. ^ "Class-action lawsuits". The Economist. June 30, 2005. 
  31. ^ [2]
  32. ^ Martha Graybow (March 21, 2008). "US shareholder lawyer Melvyn Weiss to plead guilty". Reuters. 
  33. ^ Dawn Kawamoto (July 9, 2007). "One of the lawyers Silicon Valley loves to hate". CNET News.com. Archived from the original on July 19, 2012. 
  34. ^ Edvard Pettersson (June 2, 2008). "Weiss Sentenced to 2½ Years for Kickback Scheme (Update1)". Bloomberg L.P. Weiss, 72, must also forfeit $9.75 million and pay a fine of $250,000. He pleaded guilty April 2 to racketeering conspiracy, admitting he helped secretly pay a stable of plaintiffs to file suits from 1979 through 2005. By using them to sue first, the firm was more likely to lead cases and reap larger fees. 

External links[edit]