June 2014 Newsletter


•  Regulators in Europe Announce Evidence of Foreign Exchange Price Manipulation, Step Up Investigations

•  Judge Sustains Consumer Fraud Allegations Against Major Sweetener Company

•  Consumers Seek Leave to Appeal Late Fee Credit Card Case to the United States Supreme Court

•  Senate Passes Antitrust Whistleblower Anti-Retaliation Act

•  Department of Justice Sues ConAgra, Cargill, and CHS to Alter Joint Venture

•  Conferences and Educational Seminars


Regulators in Europe Announce Evidence of Foreign Exchange Price Manipulation, Step Up Investigations


On May 20, 2014, Germany’s financial watchdog, BaFin, announced that it had found evidence of financial institutions manipulating currency rates.  The head of banking supervision at BaFin, Raimund Roeseler, stated, “There were clearly attempts to manipulate prices, that’s what was disturbing.”  He went on to explain that BaFin has reviewed telephone transcripts and emails “that show traders were asking for higher or lower (currency) fixing prices, and counterparts that then dumped, for example, EUR400 million to move markets.”  As a result of this evidence, BaFin is widening its probe of Deutsche Bank AG to include all German banks that are active in currency trading.  According to Mr. Roeseler, the foreign exchange investigation is “much, much bigger” than the one into the setting of Libor. 


BaFin’s announcementfollows a similar one from Switzerland’s competition watchdog, WEKO, in late March.  WEKO has been investigating UBS, Credit Suisse, Zuercher Kantonalbank (ZKB), Julius Baer, JP Morgan, Citigroup, Barclays, and Royal Bank of Scotland.  On March 30, it announced that “evidence exists that these banks colluded to manipulate exchange rates in foreign currency trades.” 


More than 15 authoritiesaround the world are investigating collusion in the foreign exchange market.  Thus far, the worldwide probe has led to the suspension, placing on leave, or termination of at least 32 employees at 11 banks and the Bank of England. 


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Judge Sustains Consumer Fraud Allegations Against Major Sweetener Company

On March 24, 2014, Scott+Scott won an important ruling for a named plaintiff who brought suit against Merisant Company (“Merisant”), the maker of sugar alternatives such as “Equal” and “PureVia,” and its subsidiary, Whole Earth Sweetener Company, LLC (“Whole Earth”).  The Complaint, filed on January 28, 2014, alleges that Merisant and Whole Earth violated numerous consumer protection laws.  The Honorable R. Gary Klausner of the U.S. District Court for the Central District of California held that the Complaint adequately alleged causes of action, thus succinctly denying Defendants’ motion to dismiss. 

The case centers on Defendants’ labeling and marketing of its table top sweetener, PureVia, as a purportedly all natural, stevia-based, sugar-alternative sweetener.  In an attempt to capitalize on increasingly health-conscious consumers’ heightened demand for natural products, the Complaint alleged that Defendants marketed Purvia as “all natural.”  As part of a scheme to make PureVia more attractive to consumers, boost its sales, and ultimately increase its profits, Defendants, as alleged in the Complaint, use labeling terms such as “All Natural Zero Calorie Sweetener” and “Made From Pure Stevia Extract.”  Defendants also used natural imagery, such as the leaves of the stevia plant, in labeling, advertising, and marketing materials.  Plaintiff alleged that the use of these terms and natural imagery is designed to, and does, induce consumers, such as herself and the members of the putative classes, into believing that PureVia is an all natural sweetener primarily made from the stevia plant that does not contain ingredients that are either synthetic or harshly chemically processed.   As set forth in the Complaint, PureVia actually is composed predominantly of the synthetic ingredient dextrose and only a minute quantity of a stevia-derived extract, that itself is obtained through a harsh and unnatural chemical purification process. 

Judge Klausner ruled that the allegations in the Complaint adequately alleged that PureVia contained “synthetic” ingredients, that it set forth how a reasonable consumer would define “natural,” and that it set forth that PureVia does not conform to that definition.  The case is now going forward with a motion for class certification pending. 


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Consumers Seek Leave to Appeal Late Fee Credit Card Case to the United States Supreme Court

In April 2014, Scott+Scott filed a petition on behalf of consumers with the United State Supreme Court in which they argued that the Substantive Due Process Clause of the U.S. Constitution prevents credit card companies from charging consumers abusive and punitive late fees on missed credit card payments.   The case is entitled Andrew Pinon, et al. v. Bank of American, N.A., et al., Supreme Court Case No. 13-1279.

Credit card late fees are big business for credit card companies.   Consumers were hit with over $12 billion in credit card late fee charges in 2013 alone.   In addition, credit card late fees are highly punitive for consumers.   Consumers are typically forced to pay credit card companies a late fee charge that amounts to over one-hundred times the cost that the credit company actually incurs when a consumer misses a payment.  In fact, credit card late fees are so punitive that they potentially implicate the Substantive Due Process Clause of the Fourteenth Amendment.  

In the petition, Scott+Scott pointed to the Supreme Court case of Exxon Shipping Co. v. Baker, 554 U.S. 471 (2008).   There, the victims of the Exxon Valdez oil spill disaster sued Exxon for the damages that they incurred as a result of Exxon’s negligence leading up to the oil spill.   A jury awarded the victims of the oil spill $2 billion in punitive damages.   The Supreme Court, however, held that these types of excessive penalties for corporate wrongdoing violated the U.S. Constitution.   The Court cut the punitive damages award from $2 billion to $500 million.

The Supreme Court also cut a punitive damage award in Phillip Morris USA v. Williams, 549 U.S. 346 (2007).  There, the widow of a man who died of smoking-related lung cancer sued Phillip Morris for fraud for false advertising claiming that smoking was not dangerous.   A jury awarded the widow $79.5 million in punitive damages.   The Supreme Court, however, cut the punitive damages to $32 million, claiming that the damages were excessive and therefore violated the Substantive Due Process Clause.

In the petition that is currently before the Supreme Court, Scott+Scott attorneys pointed to the Exxon Valdez and Phillip Morris cases and argued that the Substantive Due Process Clause should not only protect corporations who have engaged in serious wrongdoing, but should also protect consumers who are charged abusive and unfair late fees on credit cards.  

As things now stand, however, the Substantive Due Process Clause is not being applied evenhandedly.   It is only being invoked to protect corporations from excessively punitive awards after they have engaged in corporate wrongdoing, but it is not being invoked to protect consumers from excessively punitive damage awards when they miss the due date for their credit card payment.   Scott+Scott attorneys argued that the equal application of the Substantive Due Process Clause is a matter of basic fairness and that, at a minimum, it should protect consumers from being charged abusive and grossly excessive late fee charges for late payments on credit cards.   A decision on the Supreme Court petition is expected later in 2014.



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Senate Passes Antitrust Whistleblower Anti-Retaliation Act

Antitrust cartel activity, such as competitors conspiring tofix prices, rig bids, or allocate markets, can cause tremendous harm to consumers, businesses, and the economy through lack of competition and overcharges.  Because many conspiracies are reached in secret and without formal acquiescence, antitrust cartels are hard to detect.  As a result, since 1978, the U.S. Department of Justice, Antitrust Division (DOJ) has relied on leniency programs to help uncover and prosecute illegal cartel activity.

The DOJ’s leniency program was substantially revised in 1993.  The leniency program offers the possibility that individuals or companies that self-report cartel activity will avoid criminal conviction and penalties.  Criminal violations of the antitrust laws are punishable by imprisonment of up to 10 years and a fine of up to $1 million for an individual and $100 million for corporations.  The first qualifying company to self-report in each investigation is granted immunity, creating incentives for companies to self-report as quickly as possible.

Upon learning of a criminal cartel, however, those harmed by the cartel’s anticompetitive conduct usually file civil cases seeking redress.  The possibility of leniency applicants facing liability in a civil action, where claimants seek treble damages and defendants are jointly and severally liable, was seen as potentially a disincentive for companies to take advantage of the DOJ’s leniency program.  In 2004, Congress passed the Antitrust Criminal Penalty Enhancement and Reform Act (ACPERA) to further encourage self-reporting under the leniency program.  ACPERA provided relief from treble damages and joint and several liability for leniency applicants in exchange for satisfactory cooperation with plaintiffs in the civil cases.

In 2010, Congress reauthorized ACPERA for 10 years. As part of the reauthorizing bill, Congress included a requirement that the Government Accountability Office (GAO) examine whether adding whistleblower anti-retaliation protections to supplement ACPERA effectiveness would further incentivize the reporting of criminal antitrust violations.

The GAO concluded that while the DOJ has relied heavily on leniency programs to encourage wrongdoers to self-report, third parties may also be in a position to report unlawful activity.  However, such third parties, such as contractors or other agents, expose themselves to the risk of retaliation.  Thus, whistleblowers may be hesitant to report wrongdoing to the DOJ.  The GAO recommended that Congress consider a civil remedy for whistleblowers who are retaliated against for reporting antitrust violations to the DOJ.

In November 2013, the U.S. Senate unanimously passed whistleblower protection in criminal antitrust cases.  The bill, called the Criminal Antitrust Anti-Retaliation Act (S. 42 of 113th Cong.), would amend ACPERA to allow the whistleblower who is retaliated against to file a claim with the Secretary of Labor, and, if necessary, to file suit in federal court.  The bill makes it unlawful for an employer to “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against a covered individual in the terms or conditions of employment.”  Covered individuals include an “employee, contractor, subcontractor, or agent of an employer.”  The proposed legislation would entitle whistleblowers to reinstatement, back pay, or compensation for damages due to the retaliation.  The bill is pending in the House of Representatives.


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Department of Justice Sues ConAgra, Cargill, and CHS to Alter Joint Venture

On May 20, 2014, the Department of Justice (“DOJ”) filed a complaint and a proposed final judgment that would require ConAgra Foods (“ConAgra”), Cargill Inc. (“Cargill”), and CHS Inc. (“CHS”), to divest their interests in four flour mills in order to pursue a joint venture aimed at creating the country’s largest seller of wheat flour.  The proposed joint venture, called Ardent Mills, would be comprised of the flour operations of ConAgra, Cargill, and CHS.  The proposed venture, if approved, would have approximately $4 billion in sales, or around a third of the U.S. flour business. 

The joint venture was announced on March 5, 2013 to combine ConAgra’s flour milling unit with Horizon Milling, a Cargill-CHS joint venture that was formed in 2002.  In July 2013, the DOJ announced that it was investigating the proposed joint venture to determine whether the joint venture would have an adverse impact on wheat prices received by by farmers.  Also in July, Reuters reported that Oklahoma’s attorney general and several other states were joining the federal review of the joint venture. 

After its investigation, the DOJ filed suit to formally block the formation of Ardent, but also filed a proposed final judgment that would allow Ardent to be formed if ConAgra, Cargill, and CHS agree to sell four flour plants located in California, Texas, and Minnesota. 

ConAgra, Cargill, and CHS have announced that they expect to complete the sale of the four plants and start Ardent operations by the end of May.  The four plants are being sold to Minneapolis-based Miller Milling Co.  Renata Hesse, a deputy assistant attorney general with the DOJ’s Antitrust Division, stated in a prepared statement that “[t]he divestitures will ensure that competition for hard and soft wheat flour sales is preserved in regions surrounding Los Angeles, Dallas, Minneapolis, and the Bay Area.”  The American Antitrust Institution, which had previously criticized the joint venture, said that the sales of the four mills will help to reduce the competitive damage. 

Scott+Scott attorneys are experienced in analyzing joint ventures and determining whether they comply with the law.  In fact, Scott+Scott attorneys Kristen Anderson and John Jasnoch were contributing authors of Joint Ventures: Antitrust Analysis of Collaborations Among Competitors, a book recently published by the American Bar Association’s Antitrust Law Section.   

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Conferences and Educational Seminars


June Events in the USA



          +June 1-4, 2014

          Massachusetts Association of Contributory Retirement Systems (MACRS)

          Conference Center at Hyannis

          Hyannis, Massachusetts


The four day conference will focus on a variety of issues of particular importance to the   Massachusetts retirement community, including a special presentation by Hank Kim, Executive Director and General Counsel for the National Conference on Public Employees Retirement Systems (NCPERS), who will provide the national pension update, as well as Dr. Thomas Mackell, former Chairman of the Federal Reserve Bank of Richmond.


+June 2-5, 2014

National Association of Attorneys General Summer Conference (NAAG)

The Grand Hotel

Mackinac Island, Michigan


The National Association of Attorneys General (NAAG) was established more than 100 years ago to provide Attorneys General an opportunity to communicate between the states’ chief legal officers on legal and law enforcement matters.  NAAG’s focus is: "To facilitate interaction among Attorneys General as peers and to facilitate the enhanced performance of Attorneys General and their staffs." NAAG offers "cooperative leadership," not only between the states, but also with their federal counterparts. NAAG has three major meetings: the Association’s winter meeting in Washington, DC, the NAAG Presidential Initiative Summit, and the Summer Meeting. Portions of these meetings may be open to the public and require advance registration.


+June 2-6, 2014

International Foundation of Education, Benefits for Public Pensions (IFEBP)

Doubletree Hotel Milwaukee-Brookfield

Brookfield, Wisconsin


The Trustees and Administrators Institutes are the premier educational programs for those who serve multiemployer trust funds.  IFEBP conferences offer concurrent seminars for new trustees, advanced trustees and administrators.  This seminar focuses on the Essentials of Multiemployer Trust Fund Administration.  Each features a module for handling fiduciary responsibilities, government reporting, disclosures, and how the economic political and regulatory environment impacts plans.



+June 4-6, 2014

Mid-Atlantic Plan Sponsors Annual Trustee Educational Conference (MAPS)

Hotel Monaco Baltimore

Baltimore, Maryland


The Mid Atlantic Plan Sponsors is an organization formed by trustees from eleven states in an effort to share knowledge in the public pension arena.  Pension fund trustees, administrators and professional service providers meet annually to exchange ideas and information.  The group is dedicated to the sound management of government finance resources and works as a cooperative partnership with the National Conference on Public Employee Retirement Systems (NCPERS). 



             +June 4-7, 2014

             Oklahoma State Firefighters Association’s 120th Annual Convention (OSFA)

             Hard Rock Hotel

             Tulsa, Oklahoma


The Oklahoma State Firefighters’ Association  provides its members with financial, legislative and educational advisory programs and pension seminars as well as many firefighter-specific training tools and resources.


+June 9-10, 2014

Pennsylvania State Building Trades Council, AFL-CIO  (PABCTC)

Hilton Hotel and Conference Center

Harrisburg, Pennsylvania


The Council is made up of 16 Regional Councils and more than 115 Local Unions from 15 International Building Trades Unions.  The focus of this conference is to provide a comprehensive overview of current legislative and regulatory issues facing the members including  job creation, fiduciary measures, construction industry standards, and defensive battles occurring on the federal and state level.


+June 19, 2014

American Antitrust Institute’s 15th Annual Conference (AAI)

National Press Club

Washington, DC


This year’s conference title is “The Inefficiencies of Efficiency.”  The sessions will focus on the economic theory of efficiency and “how efficiency is used in fact” and within antitrust analysis.  The conference will include sessions on supply chain inefficiencies as well as inefficiencies in mergers.


+June 23-25, 2014

25th Annual National Association of Securities Professionals Pension and Financial Services Conference (NASP)

Fairmont Hotel

San Francisco, California


NASP is the national advocate for minorities in the financial services industry.  Founded in 1986 to provide educational opportunities and create equal representation for people of color and women in all aspects of the securities industry, it is a non-profit organization and has become one of the most respected Pension and Financial Services Conferences. NASP, headquartered in Washington, DC, currently has local chapters in several metropolitan areas, including in Atlanta, Baltimore/Washington DC, Boston, Chicago, Detroit, New York, North Carolina, Philadelphia, San Francisco, Southern California, and Texas.  NASP brings together the nation’s minorities who have achieved recognition as financial professionals, including investment bankers, asset managers, public finance consultants, plan sponsors, and many other finance professionals.


             +June 25-27, 2014

             National Association of Public Pension Attorneys (NAPPA)

             Sheraton Nashville Downtown Hotel

             Nashville, Tennessee 


The National Association of Public Pension Attorneys is a legal professional and educational association founded more than 25 years ago for and by attorneys.  Continuing education credit is available at this annual educational conference.


  +June 29 - July 2, 2014

Florida Public Pension Trustee Association’s 30th Annual Conference (FPPTA)

Hilton Bonnet Creek Conference Center

Orlando, Florida


FPPTA’s primary purpose in conducting an annual educational forum is to provide the basis for improved financial and operational performance of the public employee retirement systems in the state.  FPPTA acts as a central resource for educational purposes for the public pension industry, including topics such as the political reality of public pension plans and private sector public sector plans


Government Finance Officers’ Association Conferences (GFOA)


The GFOA provides professional development training opportunities to state and local government finance professionals, as well as an ideal venue for meeting and networking with colleagues and experts from across the nation.


+ June 5, 2014

Connecticut Government Finance Officers’ Association (GFOACT)

Tunxis Plantation

Farmington, Connecticut



+ June 18-20, 2014

Maryland Government Finance Officers’ Association (MDGFOA)

Clarion Conference Center

Ocean City, Marylane



+ June 18-20, 2014

Nebraska League of Municipalities

Ramada Inn

Kearney, Nebraska



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Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firmrepresents individual as well as institutional investors who have suffered from corporate stock fraud. Scott+Scott has participated in recovering billions of dollars and achieved precedent-setting reforms in corporate governance on behalf of its clients. In addition to being involved in complex shareholder securities and corporate governance actions, Scott+Scott also has a significant national practice in antitrust, ERISA, consumer, civil rights and human rights litigation. Through its efforts, Scott+Scott promotes corporate social responsibility.

Scott+Scott’s PT+SM System is the firm’s proprietary investment portfolio tracking service. Carefully combining the firm’s proprietary computer-based portfolio monitoring software with Scott+Scott’s hands-on approach to client  relations is a proven method for institutional investors and their trustees to successfully

  • Monitor their investment portfolios  
  • Identify losses arising from corporate fraud    
  • Consider what level of participation any given situation requires   
  • Recover funds obtained on their behalf through investor litigation action  

To obtain more information about Scott+Scott’s PT+SM services or to schedulea presentation to fund trustees, fund advisors or asset managers, please contact:    David R. Scott + Toll Free: 800.404.7770     email: drscott@scott-scott.com + UK Tel: 0808.234.1396