2017

April 2017

INSIDE THIS ISSUE

Scott+Scott Obtains Final Approval of Settlement in MetLife, Inc. CEUs Securities Litigation

Scott+Scott Recovers $18.5 Million for King Digital Entertainment Investors

Scott+Scott Challenge to Wyndham Hotel's Drip-Fees Survives Motion to Dismiss

Scott+Scott Appointed Interim Co-Lead Class Counsel in Actions Challenging United & Humana's Prescription Copayment Clawbacks

Scott+Scott Addresses the Effect of the EU Damages Directive Upon the Settlement of English Antitrust Litigation

Conferences and Educational Seminars

 


Scott+Scott Obtains Final Approval of Settlement in MetLife, Inc. CEUs Securities Litigation

 

Following a hearing on March 9, 2017, the Honorable Elisabeth A. French of the Circuit Court of Jefferson County, Alabama, granted final approval of the proposed $9.75 million, all-cash settlement in City of Birmingham Retirement & Relief System v. MetLife, Inc., No. 01-cv-2012-902101.00.  The settlement concludes over four years of litigation in both state and federal court in Alabama between a nationwide class of shareholders, MetLife, Inc. (“MetLife”), certain of MetLife’s senior officers and directors, and the underwriters of the offering at issue.

 

Plaintiff first filed suit on July 5, 2012 in Alabama state court, alleging that MetLife, certain of its senior officers and directors, and the underwriters of the MetLife’s March 4, 2011 public offering of approximately $3.3 billion worth of MetLife Common Equity Units (“CEUs”) (the “Offering”), violated sections 11, 12(a)(2), and 15 of the Securities Act of 1933.  Specifically, Plaintiff alleged that the defendants misrepresented and/or failed to disclose critical facts in the Offering materials regarding MetLife’s selective use of the United States Social Security Administration’s Death Master File, MetLife’s improper retention of benefits owed to life insurance beneficiaries, and that MetLife’s incorporated financial statements were artificially inflated as a result of having failed to properly account for related loss exposures.  Plaintiff and other members of the class – those who purchased CEUs in the Offering – suffered losses when the truth about these matters was disclosed.

 

Defendants thereafter removed the action to the U.S. District Court for the Northern District of Alabama, but Scott+Scott twice successfully argued that the case should be remanded back to state court.  After both a Magistrate Judge and a U.S. District Court Judge considered Plaintiff’s motion to remand, the case was eventually remanded back to the Alabama Circuit Court where it was first filed.  After exhaustive briefing and lengthy oral argument, on October 14, 2015, the Court denied the defendants’ motion to dismiss in its entirety.

 

Shortly thereafter, Defendants filed a petition for a writ of mandamus, a sort of appeal, to the Alabama Supreme Court.  With the parties facing yet another round of vigorously contested briefing before the Alabama Supreme Court, the parties agreed to stay proceedings in the summer of 2016 to explore settlement discussions.  Those efforts were successful, ultimately resulting in the $9.75 million, all-cash settlement.

 

Scott+Scott considers this settlement to be an excellent result for the class, providing extremely valuable relief for purchasers of MetLife CEU’s in the Offering.

 

Scott+Scott Recovers $18.5 Million for King Digital Entertainment Investors

 

King Digital Entertainment plc has agreed to pay $18,500,000 to purchasers of its common stock from March 26, 2014 through September 22, 2014 to settle claims that the Company and certain of its officers and directors made misrepresentations and omitted key material information regarding the Company’s business and prospects in the Registration Statement and Prospectus used to conduct the Company’s Initial Public Offering (“IPO”) in March 2014.  The Scott+Scott lawyers who represent the plaintiffs consider this a great result, and, on February 1, 2017, the Honorable Judge Curtis E.A. Karnow of the Superior Court for the State of California, County of San Francisco, preliminarily approved the settlement. 

 

King Digital (“King” or the “Company”) is a mobile gaming company based in Dublin, Ireland.  King is the developer of the popular mobile game Candy Crush Saga.  King operates on a “freemium” business model, meaning that its games are free to play, but if a player pays a small fee, it enables the player to access more functionality in the game or extend play into higher levels.  On March 27, 2014, King went public, selling 22.2 million shares at $22.50 per share, raising a total of over $499 million in proceeds.  King’s shares traded on the New York Stock Exchange under the ticker symbol “KING” prior to the Company being acquired by a division of Activision Blizzard. 

 

On behalf of the plaintiffs, Scott+Scott filed the first suit concerning the King IPO on March 17, 2015, alleging misstatements and omissions in violation of Sections 11 and 15 of the Securities Act of 1933 (the “1933 Act”).  Several other similar cases were filed in the coming weeks, which were later consolidated, and the Court appointed Scott+Scott as co-lead counsel for the plaintiffs.  The plaintiffs’ allegations of misrepresentation related to a variety of issues, but chiefly concerned whether revenues from Candy Crush saga booking were declining more than was disclosed, whether the Company was achieving its stated diversification strategy, and whether the Company’s monthly unique payers metric was in a growth trend as represented.  Plaintiffs further alleged that when information concerning these issues was later revealed to the market, the price of King common stock dropped significantly.  On October 7, 2015, the Court denied the Defendants’ attempts at having the case dismissed in its entirety.  Thereafter, following months of litigation and discovery, the Court certified a class of King IPO investors on June 9, 2016.  The Parties entered into a formal settlement agreement in October 2016.

 

The parties’ preliminary settlement agreement is subject to certain conductions, including court approval of a final settlement agreement at the settlement fairness hearing on May 18, 2017.  If granted final approval, the settlement is believed to be the largest-ever settlement for a 1933 Act case brought in a California state court. 

 

The case is In re King Digital Entertainment plc Shareholder Litigation, Case No. CFC-15-544770 in the Superior Court for the State of California, County of San Francisco.   For more information on the proposed settlement, please visit www.kingdigitalshareholdersettlement.com.

 

Scott+Scott Challenge to Wyndham Hotel's Drip-Fees Survives Motion to Dismiss

 

Scott+Scott turned back a challenge to claims against Wyndham Hotels for overcharging guests who booked rooms online.  Plaintiff alleged that the nightly rate Wyndham advertised to prospective guests was false and misleading because it failed to include a $25/night resort fee that Wyndham tacked on at the end of the checkout process. Worse, the resort fee - which represents pure profit to Wyndham - was presented to guests as a tax. The practice of applying so-called drip fees has been roundly criticized by the FTC for its potential to deceive consumers. Drip-fees allow hoteliers like Wyndham to advertise rooms at rates that appear lower than they are, stymieing consumers' attempts to compare prices.

 

Plaintiff asserted claims under the New Jersey Consumer Fraud Act and the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act. Wyndham raised a flurry of arguments against both, which the Court rejected. The Court agreed with Plaintiff's argument that Wyndham's terms of service, which specified that New Jersey law would govern, applied to Plaintiff's attempt to book a Wyndham hotel room in Florida. The Court also agreed that Plaintiff had properly alleged that Wyndham's failure to disclose its purported resort fee stated a claim under the Consumer Fraud Act, and that Plaintiff suffered an ascertainable loss because he alleged that he purchased a hotel room that he would not have purchased, absent Wyndham's deception.

 

The Court's treatment of Plaintiff's Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) claim is particularly notable. Courts remain split over how broadly the act is meant to be interpreted, as well as who has standing to assert a claim, and the Court asked the parties for supplemental briefing on the issue. Plaintiff alleged that Wyndham's terms of service impermissibly limited the types of damages Plaintiff could receive, in direct contravention of Plaintiff's rights under New Jersey law. Specifically, Wyndham attempted to disclaim liability for claims brought for Wyndham's negligent, willful, malicious and wanton misconduct; bar claims for personal and economic injury and punitive damages; and ban consumers from asserting claims against Wyndham for deceptive and fraudulent conduct. The Court agreed with Plaintiff's arguments that Plaintiff had both constitutional and statutory standing to challenge Wyndham's terms of service. In particular, the Court held that Plaintiff's efforts to vindicate his right to recover damages embodied interests that were both concrete and personal to him. The Court distinguished Plaintiff's case from others where claims under TCCWNA failed because Plaintiff was not asserting only a bare technical violation of TCCWNA, but had also plausibly pled a risk of tangible injury to Plaintiff's right to redress under the Consumer Fraud Act.

 

The case is Luca v. Wyndham Worldwide Corp., Case No. 16-CV-746 (W.D. Pa.).

 

Scott+Scott Appointed Interim Co-Lead Class Counsel in Actions Challenging United & Humana's Prescription Copayment Clawbacks

 

Scott+Scott has been appointed Interim Co-Lead Class Counsel in consolidated actions against United and Humana challenging their fraudulent and deceptive pricing schemes to artificially inflate prescription copayment amounts to purchase medically necessary, covered prescription drugs.

 

On February 6, 2017, Judge Becky R. Thorson of the District of Minnesota appointed Scott+Scott as Co-Lead Interim Class Counsel in a consolidated action against United and OptumRx. On March 10, 2017, Judge Greg N. Stivers of the Western District of Kentucky appointed Scott+Scott as the Co-Lead Interim Class Counsel in a consolidated action against Humana and Humana Pharmacy Solutions.

 

Scott+Scott's action targets the practices of both United and Humana and their pharmacy benefit managers OptumRx and Humana Pharmacy Solutions. The health insurance companies promise their customers that when they purchase medically necessary covered prescription drugs, they will pay the lesser of a copayment or the cost of the prescription drug. Despite this promise, customers are charged a copayment even when the copayment is more than the cost of the prescription drug. After the customer overpays for their medically necessary prescription drugs, the pharmacy benefit manager then claws back from the pharmacy the difference between the customer's copayment and the cost of the drug, minus a nominal fee to the pharmacy for dispensing the drug.

 

Using United as an example, when a consumer pays a $10 prescription copayment to a pharmacy for a medically necessary covered prescription drug, as required under the customer's plan, the cost of the drug may be only $3. OptumRx, the pharmacy benefit manager, then reduces the pharmacy’s reimbursement for the claim for this prescription by $6 as an adjustment to the original claim. In this scenario, OptumRx has “clawed back” $6 of the $10 copay. Ultimately, the pharmacy is reimbursed $4 (all from the customer's copayment) making only $1 over the cost of the drug, while United fraudulently retains $6 – which it does not pass back to the customer. As a result, United customers end up paying more for certain medically necessary prescription drugs than they would have if they were uninsured and paid for the same drugs out of pocket.

 

Scott+Scott is currently serving as the Chair of Plaintiffs' Executive Committee in an action challenging similar practices by Cigna in Connecticut.

 

The cases are In re UnitedHealth Group PBM Litigation, Case No. 16-CV-3352 (D. Minn.) and In re Humana, Inc. PBM Litigation, Case No. 16-CV-706 (W.D. Ky.).

 

Scott+Scott Addresses the Effect of the EU Damages Directive Upon the Settlement of English Antitrust Litigation

 

As Scott+Scott London’s office explains in its article published in the recent edition of Global Competition Litigation Review, one of the greatest obstacles to negotiating settlements in cartel damages claims in England, particularly at an early stage, arises from the joint and several liability of cartelists for all losses caused by the cartel.  Individual cartelists fear that, even if they settle with the claimant, they will be drawn back into the litigation by way of contribution claims by their fellow cartelists.  To date, English law has had no comprehensive solution to this problem.  However, this should change following the implementation of Article 19 of the EU Damages Directive, which is modelled on provisions of Dutch, French, and Belgian law that effectively solves this conundrum.

 

Article 19 requires each EU Member State to introduce changes to their antitrust regimes such that a bilateral settlement between a claimant and a defendant who is jointly and severally liable for a multi-party competition infringement:

 

·         precludes the claimant from claiming any part of the settling defendant’s relative share of the claimant’s loss from the non-settling defendants; and

·         prevents the non-settling defendants from claiming contribution from the settling defendant.

 

These changes should facilitate earlier bilateral settlements of cartel damages claims.  Not only would that enable claimants to obtain compensation sooner, but it would allow defendants to resolve their liability earlier and so lessen the cost in terms of both time and money, and reputational damage, involved in prolonging proceedings which they may otherwise wish to settle.  It may also lead to settlements on simpler terms, as parties will no longer have to agree to complicated contractual mechanisms in order to guard against the risk that the settling defendant will be required to pay more by way of contribution. 

 

Consequently, while these changes only apply in England to infringements which begin after December 27, 2016, they are to be welcomed by claimants and defendants alike.  

 

 

Conferences and Educational Seminars

 

April Events in the USA

 

 

+April 8-12, 2017

 

Texas Public Employees Retirement System (TEXPERS) 28th Annual Conference

Hilton Austin

Austin, Texas   

 

The Texas Public Employees Retirement System is sponsoring their 28th Annual conference.  A small group of individuals, who were members of several Texas Public employee retirement systems, formed Texas Association of Public Employee retirement Systems (TEXPERS) in 1989 as a statewide voluntary nonprofit association to provide quality education to trustees, administrators, professional service providers and employee groups and associations engaged or interested in the management of public employee retirement systems.  TEXPERS system and associate membership has grown substantially representing $475 billion in assets.  TEXPERS executes its educational mission by organizing two annual conferences for pension trustees to receive information about investments, fiduciary duties, governance, ethics, and legal matters. The Austin conference offers and encourages attendees to participate in Saturday’s Trustee School.  Many attendees use this training opportunity to become certified trustees.  The Austin conference concludes with legislative visits to the Texas Capitol and recognition of state legislators and representatives who support the TEXPERS’ mission.

 

 

+April 18-19, 2017

 

The Pension Bridge Annual Conference

The Four Seasons Hotel

San Francisco, California

 

 

The Pension Bridge Inc. is a professional company that offers educational conferences to the         Institutional Investment Community by providing a high level of education with an impressive and influential speaker faculty in a setting that is conducive to networking.  The networking sessions are unique and designed to help connect industry peers and prospective business contacts. The ratio of plan sponsor to service provider allows the event to be desirable and accommodating in the conference industry .The Pension Bridge is known for its strength, stability, relationships and operational excellence.

 

 

+April 23-25, 2017

 

35th    Native American Finance Officers’ Association Annual Conference (NAFOA)

The Hilton San Francisco Union Square

San Francisco, California

 

The two day conference will feature more than 2 dozen sessions and exciting keynotes focused on investing in Indian country, policy and legislation affecting tribes, accounting updates and economic development opportunities. Hear from leading industry experts and tribal leaders on strategies for financial success. Sessions support professional growth of attendees and provides them a chance to engage with tribal leaders, professionals and influential federal agencies.

 

 

+April 26-28, 2017

 

The 58th California Municipal Treasurers Association Annual Conference (CMTA)

Marriott Newport Beach

Newport Beach, California

 

The California Municipal Treasurers Association Annual Conference is one of the          profession’s longest running state conferences, bringing together almost 150 public sector treasurers and finance professionals throughout California who meet in an educational format to discuss treasury and financial management strategies, improve skills and address the tough challenges they face today.

 

 

Government Finance Officers’ Association Conferences

 

+April 9-10, 2017

Texas Government Finance Officers’ Association Spring Institute

Renaissance Hotel

Austin, Texas

http://www.gfoat.org

 

 

+April 19-21, 2017

Alaska Government Finances Officers’ Association Spring Conference

Westmark Baranof Hotel

Juneau, Alaska

http://www.agfoa.org

 

+April 19-21, 2017

Iowa Municipal Finance Officers’ Association (IMFOA)

Holiday Inn Airport/ Conference Center

Des Moines, Iowa

www.imfoa.org  for conference details

 

+April 19-21, 2017

Utah GFOA Spring Conference

Hilton Garden Inn

St. George, Utah

http://www.ugfoa.com

 

+April 20, 2017

Wisconsin Government Finance Officers’ Association (WGFOA)

Landmark Resort

Egg Harbor, Wisconsin

http://www.wgfoa.org

 

+April 23-26, 2017

Pennsylvania Government Finance Officers’ Association (PGFOA) 31dt Annual Conference

Penn State Conference Center

State College, PA

http://www.gfoapa.org

 

+April 27, 2017

Maryland Government Finance Officers’ Association Quarterly Conference

BWI Marriott

Linthicum, Maryland

http://www.mdgfoa.org