Bloomberg News

AT&T, HSBC-MF Global, BP, Sabre, Apple, AMR in Court News

December 12, 2011

(Updates AT&T in Top section. Adds BP and NBA in Lawsuits and Madoff in Verdicts.)

Dec. 12 (Bloomberg) -- AT&T Inc.’s plan to buy T-Mobile USA Inc. was placed in further jeopardy after a federal judge agreed to consider a request by the U.S. to postpone or dismiss its lawsuit seeking to block the deal.

Lawyers for AT&T and T-Mobile, saying the government’s suit against them had turned into their best hope to complete the transaction, urged U.S. District Judge Ellen Segal Huvelle in Washington to keep the case on track for a Feb. 13 trial. The U.S. argued the case may be moot after AT&T withdrew its merger application at the Federal Communications Commission.

A decision to dismiss or delay the Justice Department’s case would put the deal all but out of reach for AT&T. The company’s strategy for regulatory approval rests on winning a favorable court decision it could use at the FCC to argue that the transaction isn’t anticompetitive. Without such a ruling, AT&T has no chance of getting the deal done, T-Mobile’s lawyer, George Cary, told Huvelle at a hearing Dec. 9

“If this case doesn’t go ahead, then the deal is over,” he said.

Huvelle, who scheduled a hearing for Dec. 15 on the government’s request, said she was concerned that without an FCC application in process it might be impossible to meet the deadline for the deal and the trial would be a waste of time.

“We don’t have any confidence that we are spending all this time and effort and the taxpayers’ money and that we’re not being spun,” Huvelle said. “The landscape has changed,” she said, pressing AT&T’s lawyers on whether completing the purchase by the contractual deadline of Sept. 20 is still realistic.

AT&T’s lawyer, Mark Hansen, told Huvelle that the company “wants its day in court.” AT&T would have to pay T-Mobile about $3 billion, as well as spectrum and other services worth about another $4 billion, according to analysts, if the transaction doesn’t close by Sept. 20.

Justice Department lawyer Joseph Wayland said the government will seek to put its suit on hold or withdraw it, while reserving the right to refile, because AT&T pulled back its FCC merger application. FCC approval is required to complete the transaction, he said. The fact that AT&T had an application before the FCC was among the reasons the department sued to block the deal in August, Wayland said.

Huvelle ordered the government to file its briefs by tomorrow.

“By saying they will file to dismiss, the Justice Department is calling AT&T’s bluff,” said Andrew Gavil, an antitrust professor at Howard University School of Law in Washington. “They’re saying ‘You cannot maneuver us into litigation with you by withdrawing your application from the FCC.’”

The government’s case is U.S. v. AT&T Inc., 1:11-cv-01560; Sprint’s case is Sprint Nextel Corp. v. AT&T Inc., 11-cv-01600; and Cellular South’s case is Cellular South Inc. v. AT&T Inc., 1:11-cv-01690, U.S. District Court, District of Columbia (Washington).

For more, click here.

New Suits

HSBC Sues MF Global Trustee Over $850,000 Worth of Gold

HSBC Holdings Plc sued the MF Global Inc. brokerage trustee to establish whether he or another person is the rightful owner of gold bars worth about $850,000 and silver bars underlying contracts between the brokerage and a client.

Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage and client Jason Fane of Ithaca, New York, London-based HSBC said in a court filing Dec. 8. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said, asking a judge to decide who the rightful owner is.

“HSBC has received conflicting instructions regarding ownership and disposition of the property,” it said. “Accordingly, HSBC is exposed to multiple liabilities with respect to the disposition of the properties.”

Bullion is selling for about $1,717 an ounce on the Comex in New York, up about 21 percent this year, as investors bought the metal to protect their wealth from Europe’s escalating debt crisis, and reached a record $1,923.70 in September. Treasuries returned 9.3 percent, a Bank of America Corp. index shows.

“These bars are mine,” Fane said in an e-mail Dec. 9. “We had a letter from HSBC that they were on the loading dock to be shipped to our warehouse contractor when there was some action taken by a third party to stop or delay shipment.”

The trustee expects this “relatively minor and not unusual dispute” to be successfully resolved, said Giddens spokesman Kent Jarrell in an e-mail.

Fane wrote HSBC after the bankruptcy, asking the bank to transfer the bars to his account at Brink’s, according to a copy of his letter filed in court. The trustee wrote HSBC saying the gold and silver was “customer property,” and the bank shouldn’t turn it over to Fane, HSBC said in the filing. Brink’s provides vaults and other services for the safekeeping of valuables.

The judge handling the bankruptcy said Dec. 9 he would deal in January with issues about distributing physical goods, such as gold and silver bars, after lawyers for some customers said they couldn’t get their share of the payouts because bars can’t be broken into pieces.

Kent Jarrell, a spokesman for trustee James Giddens, didn’t respond to an e-mail seeking comment on the dispute. An e-mail to Fane wasn’t returned.

The parent company’s Oct. 31 bankruptcy filing, the eighth- largest in U.S. history, listed assets of $41 billion. Jon Corzine, the former co-chief executive officer of Goldman Sachs Group Inc., quit as MF Global’s CEO on Nov. 4.

The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent’s bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For the latest new suits news, click here. For copies of recent civil complaints, click here.

Lawsuits/Pretrial

Mexican States, Alabama Cities Can’t Bring Some BP Claims

Mexican states and Alabama cities that a federal judge deemed too far removed from the 2010 Gulf of Mexico oil spill to have been physically harmed by it had some of their claims against BP Plc dismissed.

U.S. District Judge Carl Barbier in New Orleans also threw out state law claims by six Louisiana parishes seeking penalties over wildlife killed or injured by the spill. He said the parishes, or counties, can still sue BP and other spill companies under U.S. law to recover wildlife losses, spill damages and removal costs.

“The Mexican states have failed to demonstrate that recovery is authorized by a treaty or executive agreement” between the U.S. and Mexico, Barbier said in the Dec. 9 ruling. The coastal states of Tamaulipas, Quintana Roo and Veracruz must prove that a “proprietary interest” was physically harmed by the drifting oil in order to sue BP for negligence, he said.

Barbier threw out claims by four inland Alabama cities that sued BP and other companies involved in the spill for physical damages and economic losses.

“The court also takes notice of the fact that the Alabama cities are not located directly on the coast, but are some distance inland,” Barbier said.

Rhon Jones, the lawyer for the Alabama cities, said Barbier’s ruling instructs the cities to present their claims directly to BP. If the oil company won’t pay, the judge said the cities may come back to the court for further consideration.

“These four Alabama cities are on direct travel routes to the coast,” he said. “We believe these cities have suffered an economic impact because of the spill.”

The decision allows the Mexican states to pursue some claims because they “all did suffer proprietary interest damages,” Enrique Serna, their attorney, said in a phone interview. “Regarding negligence and gross negligence, we are content that those claims are alive.”

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

For more, click here.

NBA Drops Antitrust Suit Against Players’ Union in New York

The National Basketball Association dropped its lawsuit seeking to block antitrust claims brought by the union that represents NBA players.

The league and the National Basketball Players Association on Nov. 26 announced an agreement in principle on a new labor deal, paving the way for an end to the lockout that forced the cancellation of part of the NBA season.

Both sides filed papers in Manhattan federal court Dec. 9 dismissing the suit, which the NBA filed in August. The league claimed the union was using the threat of antitrust litigation to extract better terms in contract talks.

The move came the day after payers and owners ratified a 10-year labor agreement, which will allow the season to start Dec. 25. The NBA will play a shortened 66-game season.

National Basketball Association v. National Basketball Players Association, 11-cv-05369, U.S. District Court, Southern District of New York (Manhattan).

Sabre Seeks to Pursue Antitrust Claims Against American

Sabre Holdings Corp. asked a judge to modify the so-called automatic stay in American Airlines’ bankruptcy so it can pursue counterclaims against the carrier in an antitrust dispute.

Sabre said in its filing in U.S. Bankruptcy Court in New York that AMR Corp.’s American doesn’t oppose the request.

“To enforce the automatic stay would permit American to use the stay as a sword, not a shield, in litigation crucial to both American and Sabre,” Sabre said in the filing.

American sued Travelport Ltd. and Orbitz Worldwide Inc., the operators of electronic reservations systems, in April accusing them of monopolizing the distribution of fare and flight data to travel agents. Sabre, the largest U.S.-based global fare data distribution system, was added as a defendant in June.

Trials had already been scheduled by the state and federal courts for next year in the antitrust lawsuits when American filed for Chapter 11 bankruptcy last month. Sabre, based in Southlake, Texas, filed antitrust counterclaims before the bankruptcy.

Although American is permitted under bankruptcy law to continue pursuing its affirmative claims, the automatic stay precludes Sabre from going ahead with its counterclaims.

The bankruptcy court will hold a hearing to decide whether Sabre can continue with its half of the suits.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Samsung Wins Approval for Australia Tablet Sales as Apple Loses

Samsung Electronics Co. will start selling its rival to Apple Inc.’s iPad 2 in Australian stores before Christmas after the country’s highest court denied the U.S. company’s bid to maintain a ban on Samsung Galaxy tablets.

Chief Justice Robert French, on behalf of the three-judge High Court panel, said Dec. 9 that Apple failed to persuade them that it could win on appeal and denied the company a hearing. He reinstated an appeals court judgment lifting the ban on the Galaxy 10.1 tablets in Australia.

The ruling ends Apple’s four-month effort to keep the iPad’s biggest rival out of Australia on claims it infringes patents related to touch-screen technology. Apple and Samsung, the world’s biggest makers of smartphones and tablet computers, have sued each other on four continents since the Cupertino, California-based company accused the South Korean electronics maker in April of “slavishly copying” its products.

“While the win in Australia won’t give a big boost to Samsung’s revenue, it should be seen as symbolic,” Choi Do Yeon, an analyst at LIG Investment & Securities Co. in Seoul said in a phone interview. “Samsung suffered a blow to its image from earlier losses, but now they’re recovering.”

Samsung’s lawyer Katrina Howard said last week, before a High Court judge extended the ban, the company had planned to import the tablets into Australia over the weekend and have them in stores on Monday.

Howard said it was “critical” for the company to start sales before Christmas.

Apple and Samsung have filed at least 30 lawsuits against each other, according to the Suwon, South Korea-based company.

On Dec. 8, Samsung failed to win an order from a Paris court to block Apple from selling its newest smartphone iPhone 4S in France. The maker of iMac computers also said it will appeal a U.S. judge’s refusal to block Samsung’s 4G smartphone and Galaxy Tab 10.1 computer.

The case is: Apple Inc. v. Samsung Electronics Co. NSD1243/2011. Federal Court of Australia (Sydney).

For more, click here.

Brian Kim Offered 6- to 18-Year Term in Alleged Ponzi Scheme

Brian Kim, a former hedge-fund manager accused of running a $6 million Ponzi scheme, was offered six to 18 years in prison by prosecutors in exchange for a guilty plea to grand larceny and related charges.

Kim was taken into custody this year by authorities in Hong Kong, where he had fled before a U.S. trial scheduled to begin in January on charges that he stole $430,000 from a Manhattan condominium complex where he lived.

He was indicted again in February and charged with running a Ponzi scheme at his firm, Liquid Capital Management LLC, from January 2003 to January 2011. He returned to the U.S. in October and pleaded not guilty to grand larceny and bail jumping.

Kim hasn’t decided whether to accept the Manhattan district attorney’s offer, which would resolve all three of the state cases against him, his lawyer, Justin Levine, said Dec. 9 after a hearing before Justice Charles Solomon of the New York State Supreme Court Judge. His client may face as long as 45 years in prison if convicted of all the charges, Levine said.

Kim plans to plead guilty next week in federal court in Manhattan to passport-fraud charges that carry a maximum sentence of a year in prison, Levine said. U.S. prosecutors accused Kim of lying to officials in New York to obtain a new passport by saying he had lost his, which he had surrendered as part of the 2009 condo case, Levine said.

The state case is People v. Kim, 2011/86, New York State Supreme Court, New York County (Manhattan). The CFTC suit is U.S. Commodity Futures Trading Commission v. Kim, 11-cv-01013, and the federal criminal case is U.S. v. Kim, 11-cr-00642, U.S. District Court, Southern District of New York (Manhattan.)

For more, click here.

For the latest lawsuits news, click here.

Trials

Dr Pepper Snapple Group to Appeal $18.3 Million Jury Verdict

Dr Pepper Snapple Group Inc., the soft-drink maker, said it plans to appeal an $18.3 million verdict awarded to six plaintiffs in an age-discrimination lawsuit against its American Bottling Co. unit.

The case involved activities that occurred before the company’s spinoff from Cadbury Plc in 2008, Dr Pepper said Dec. 9 in a filing with the U.S. Securities and Exchange Commission. A federal jury in Los Angeles returned the verdict on Dec. 7, the company said.

Dr Pepper said in the filing that it has established a reserve equal to the awarded damages. The Plano, Texas-based company said its 2011 earnings may be less than forecast because didn’t anticipate the verdict.

The complaint, filed in March 2009 by present and former employees, alleged that American Bottling enforced an unwritten policy of discriminating against older workers. The company assigned older truck drivers and forklift operators to more difficult tasks so they would quit or become injured, according to the complaint.

The workers sought damages for lost income, medical costs and attorneys’ fees.

The case is Ward v. Cadbury Schweppes Bottling Group, 2:09- cv-03279, U.S. District Court, Central District of California (Los Angeles).

For the latest trial and appeals news, click here.

Verdicts/Settlements

Ex-Madoff Employee Lipkin Continues Cooperation, U.S. Says

Eric Lipkin, a former Bernard L. Madoff Investment Securities LLC employee who pleaded guilty to falsifying documents to help carry out the biggest Ponzi scheme in U.S. history, is continuing his cooperation with authorities, prosecutors said.

U.S. District Judge Laura Taylor Swain approved Dec. 9 a request by federal prosecutors for a six-month postponement of Lipkin’s sentencing, scheduled for Dec. 15, “given Lipkin’s continuing cooperation with the government.”

Lipkin, who faces as many as 70 years in prison for his role in the Madoff fraud, will be sentenced June 15.

Lipkin pleaded guilty in June to six criminal counts, including conspiracy, falsifying records and bank fraud. He agreed to cooperate with the government in its investigation of the fraud at his former firm, which was made public with founder Bernard Madoff’s arrest in December 2008.

Lipkin admitted he falsified documents to show non-existent account holdings, to put people on the Madoff payroll who didn’t work for the firm and to fraudulently apply for a construction loan. He is free on $2.5 million bond.

Madoff, 73, is serving a 150-year term in a North Carolina prison.

The case is U.S. v. Lipkin, 10-CR-228, U.S. District Court, Southern District of New York (Manhattan).

Ex-Day Trader Bouchareb Gets 30 Months in Insider Case

Former day trader Jamil Bouchareb was sentenced to 30 months in prison for trading on stock tips gleaned from the wife of a former Lehman Brothers Holdings Inc. salesman.

Bouchareb’s partner, Daniel Corbin, was sentenced to six months immediately after U.S. District Judge Victor Marrero imposed Bouchareb’s sentence Dec. 9 in federal court in Manhattan.

Bouchareb and Corbin were indicted in December 2008 on charges they made illegal trades based on confidential tips from the wife of Matthew Devlin, the former Lehman salesman. Devlin’s wife, Nina Devlin, at the time was a Brunswick Group public- relations executive who was involved with corporate deals. Nina Devlin wasn’t charged with wrongdoing.

Bouchareb pleaded guilty to conspiracy and securities fraud in May 2009, agreeing to forfeit $1.58 million.

“I made a stupid mistake,” Bouchareb told Marrero at the hearing. “If you could allow me a second chance, I’d appreciate it.”

People trading on the tips reaped more than $4.8 million on illegal transactions from March 2004 to July 2008, according to a related civil case brought by the U.S. Securities and Exchange Commission.

The case is U.S. v. Bouchareb, 08-mj-2777, U.S. District Judge, Southern District of New York (Manhattan).

For more, click here.

For the latest verdict and settlement news, click here.

Court Filings

American Airlines Bankruptcy Docket Most Popular on Bloomberg

The bankruptcy docket of AMR Corp., the parent American Airlines, was the most-read litigation docket on the Bloomberg Law system last week.

The Fort Worth, Texas-based company, which traces its roots to 1920s air-mail operations in the Midwest, listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed Nov. 29 in U.S. Bankruptcy Court in Manhattan.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For more, click here.

--With assistance from David McLaughlin, Bob Van Voris, Linda Sandler, Chris Dolmetsch and Tiffany Kary in New York; Tom Schoenberg and Sara Forden in Washington; Phil Milford in Wilmington, Delaware; Sophia Pearson in Philadelphia; Joe Schneider in Sydney; Jun Yang in Seoul; Laurel Brubaker Calkins in Houston; Margaret Cronin Fisk in Southfield, Michigan; and Mary Schlangenstein in Dallas. Editor: Glenn Holdcraft

To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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