October 2014 Newsletter


•  Scott+Scott and Managing Partner David R. Scott Receive Highly Recommended Ranking from Benchmark Litigation

•  Scott+Scott Recovers $8 Million in Pharmaceutical Antitrust Case

•  Restrictive Federal Antitrust Doctrines May Not Apply To State Antitrust Law Claims, Says Scott+Scott Partner Kristen M. Anderson

•  Ninth Circuit Deems Barnes & Noble’s Browse-Wrap Arbitration Agreement Unenforceable

•  European Commission Fines Smart Card Chip Manufacturers for Participation in a Price-Fixing Cartel

•  Conferences and Educational Seminars


Scott+Scott and Managing Partner David R. Scott Receive Highly Recommended Ranking from Benchmark Litigation

The law firm of Scott+Scott, Attorneys At Law, LLP and its managing partner, David R. Scott, have received a highly recommended ranking by Benchmark Litigation for the third consecutive year.  David R. Scott will be featured in Benchmark Litigation 2015 as a Litigation Star for his outstanding work in litigation.  Mr. Scott has consistently handled complex, high-stakes cases in multiple jurisdictions, concentrating on commercial and class action trial work.  

 Mr. Scott’s work involves antitrust, commercial, and complex securities litigation.  He has taken the lead in bringing claims on behalf of institutional investors, including claims against mortgage-backed securities trustees for failing to protect investors.  Mr. Scott has also served as lead counsel in numerous antitrust, employee retirement, and securities class action lawsuits, and has recovered hundreds of millions of dollars on behalf of class members.  He also has extensive experience litigating shareholder derivative actions, having achieved substantial corporate governance reforms on behalf of numerous clients.

 Benchmark Litigation is a guide to America’s leading litigation firms and attorneys, and is the only publication to focus exclusively on US litigation.  Recommendations are based on interviews with the nation’s leading private practice lawyers and in-house counsel.  Through these interviews, researchers examine recent casework handled by law firms and ask individual litigators to offer their professional opinions on peers.  Benchmark has been conducting research on litigators, firms, and cases for almost a decade using comprehensive questionnaires and interviews with litigators and their clients to identify the leading litigators and firms

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Scott+Scott Recovers $8 Million in Pharmaceutical Antitrust Case

 On Friday, July 11, 2014, Scott+Scott filed a motion for preliminary approval of a class action settlement between indirect end purchasers of the acne drug Doryx and its manufacturers, Warner Chilcott and Mayne Pharma.  The proposed settlement provides for $8 million in monetary relief for all persons who indirectly purchased (not for resale) or reimbursed for Doryx between September 21, 2008 and May 30, 2014.  On September 5, 2014, the United States District Court for the Eastern District of Pennsylvania granted preliminary approval of the proposed settlement.

Plaintiffs filed their class action in September 2012 after a generic drug manufacturer filed the original action, Mylan Pharmaceuticals, Inc. v. Warner Chilcott PLC, No. 2:12-cv-03824 (E.D. Pa.), earlier in the year.  Plaintiffs alleged that Defendants Warner Chilcott and Mayne Pharma maintained their monopoly over Doryx through a strategic “product hopping” or “product switching” scheme designed to exclude generic drug competition.  Each time Defendants’ branded-drug Doryx faced competition from generic manufacturers, Defendants altered the existing approved version of Doryx (the product hop or switch), and withdrew from the market the pre-existing approved version of Doryx.  These minor alternations had little, if any, therapeutic benefit for those who took the drug.  They did, however, force would-be generic competitors to start over with their approval process for a competitive generic version.  Thus, Defendants excluded generic competitors and deprived consumers of choice, forcing them to pay monopoly prices for new versions of branded Doryx.

Defendants denied Plaintiffs’ allegations and claims, contending that their changes to Doryx constituted improvements to the products’ performance, safety, and durability, and were properly made within the FDA’s regulatory regime. 

After two years of hard fought litigation, which included the review of millions of pages of documents, dozens of depositions, and numerous expert witnesses, the parties settled the case before trial.  At the time of the settlement, both summary judgment and class certification motions were pending, which presented substantial risks to Plaintiffs’ ability to take their case to trial.  The case remains in the United States District Court for the Eastern District of Pennsylvania pending final approval of the settlement.

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Restrictive Federal Antitrust Doctrines May Not Apply To State Antitrust Law Claims, Says Scott+Scott Partner Kristen M. Anderson

In addition to the federal antitrust laws (i.e., the Sherman and Clayton Acts), each of the 50 states and the District of Columbia has its own, separate antitrust statute.  Prior to 2005, most class actions brought under state antitrust laws were filed in state courts.  Accordingly, the reporters of state court opinions are filled with a rich history of interpretations of these statutes.

Following the passage of the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.), most of these state-law-predicated antitrust class actions have been heard in federal courts.  CAFA expanded federal subject matter jurisdiction over these cases by allowing putative class actions having minimal diversity of citizenship (any one plaintiff diverse from any one defendant), 100 or more class members, and more than $5 million in controversy in the aggregate (subject to some exceptions) to be brought in or removed to federal court.

Antitrust litigants have therefore increasingly called on federal district courts to interpret state antitrust laws.  Federal courts, being historically familiar with the federal antitrust laws, tend to apply interpretations of the federal antitrust laws to state antitrust laws.  Many state antitrust laws even contain harmonization provisions calling for consistency between the interpretation of state and federal law.  Other state antitrust laws, however, contain no such harmonization provision, and some were expressly amended to ensure that federal interpretations were not applied to claims under the state law.  Unless plaintiffs carefully brief and argue the distinctions, more restrictive doctrines of federal interpretation can doom meritorious state law antitrust claims.

California’s Cartwright Act of 1907, Cal. Bus. & Prof. Code §§ 16700-16770, is an example of a state antitrust statue that does not follow the pattern of the federal antitrust laws.  Prior to 1978, the Cartwright Act’s language paralleled Section 4 of the Clayton Act, 15 U.S.C. § 15, the federal statute that provides for a private right of action to enforce violations of the federal antitrust laws.  The Clayton Act and Cartwright Act both authorized anyone injured in his business or property by reason of anything forbidden in the antitrust laws to bring an action for damages.  In 1978, the U.S. Supreme Court interpreted the “injured in his business or property” language of the Clayton Act to allow only direct purchasers (i.e., those who are in privity with the defendants) to bring antitrust claims.  Indirect purchasers (i.e., who are not in direct privity with the defendants) could no longer recover damages actions for violations of the federal antitrust laws.

The Cartwright Act was amended in 1978 in direct response to the Supreme Court’s interpretation of the Clayton Act.  The amendment was to expressly provide that a damages action may be brought by “any person who is injured in his business or property by reason of anything forbidden or declared unlawful by this chapter, regardless of whether such injured person dealt directly or indirectly with the defendant.  Cal. Bus. & Prof. Code §16750.  To date, 25 states and the District of Columbia have passed statutes to allow indirect purchasers to maintain damages actions.

As this example illustrates, restrictive federal antitrust doctrines do not necessarily apply to state antitrust claims.  Scott+Scott partner Kristen M. Anderson co-authored a law review article tackling an important aspect of this topic.  In this article, she argues that federal antitrust standing doctrines do not apply to claims under the Cartwright Act.

At the beginning of a lawsuit, plaintiffs are increasingly facing the argument that they do not have standing to bring their antitrust claims.  This is especially true for claims brought by indirect purchasers.  In the article, Ms. Anderson argues that restrictive interpretations of who has standing under the Clayton Act should not be applied to determine whether a plaintiff has standing under the Cartwright Act.  In summary, because California permits a broader range of plaintiffs to sue under the Cartwright Act (i.e., both indirect and direct purchaser), the analysis for determining who has standing under the Cartwright Act must also be broader than the analysis under federal law.  She argues that the California Supreme Court, if asked to decide this question, would not apply the federal test to determine standing under the Cartwright Act.  Accordingly, courts that have applied federal antitrust standing doctrines to Cartwright Act and other state law claims were wrong to do so.

Ms. Anderson’s article was published in the Fall 2014 issue of Competition, the journal of the Antitrust and Unfair Competition Law Section of the State Bar of California and is entitled Plaintiff Perspective: The Misapplication of Associated General Contractors to Cartwright Act Claims.

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Ninth Circuit Deems Barnes & Noble’s Browse-Wrap Arbitration Agreement Unenforceable

Many of us routinely use internet websites to browse and shop.  Purchases are easy, generally secure, and do not require much time or effort.  Sometimes, however, disputes arise over our internet purchases, which can lead to litigation. 

Many internet vendors rely on arbitration agreements to govern disputes regarding their sales.  These arbitration agreements require customers to forego litigation and resolve disputes in arbitration.  In some instances, these agreements dictate where and when arbitrations will be held, and may even require the customer to at least initially bear the cost of the arbitration proceedings.

Recently, Barnes & Noble, Inc. sought to enforce an arbitration agreement in a class action filed in California.  Barnes & Noble’s website had a “Terms of Use” hyperlink located in the bottom left-hand corner of every page in its online checkout process.  The Terms of Use directed that customers would agree to arbitrate any claims or controversies arising out of their purchases.  Yet customers were neither required to read the Terms of Use, nor ever prompted to assent to them.  This type of arrangement is referred to as a “browsewrap” agreement, where a website’s terms and conditions of use are posted on the website via a hyperlink, but cannot be viewed by a customer unless and until he or she affirmatively clicks on a link that opens another window.

On August 18, 2014, in Nguyen v. Barnes & Noble, Inc., the United States Court of Appeals for the Ninth Circuit held that such browsewrap arbitration provisions are unenforceable unless clear evidence exists that the customer had actual notice of the purported arbitration agreement.  The Court wrote that where “there is no evidence that a website user had actual knowledge of the agreement, the validity of the browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract.”

The Ninth Circuit’s ruling was unambiguous: “we therefore hold that where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more – is insufficient to give rise to constructive notice.”

The Court therefore ruled that the customer did not enter into any arbitration agreement with Barnes & Noble.  Accordingly, Barnes & Noble would be required to litigate the customer’s class lawsuit in court.  This decision, whose holding extends beyond the realm of arbitration provisions, protects consumers from the possibility of agreeing to obligations of which they are unaware.

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European Commission Fines Smart Card Chip Manufacturers for Participation in a Price-Fixing Cartel

On September 3, 2014, the European Commission (“EC”) announced fines totaling 138 million euros ($177,233,400 USD) against smart card chip manufacturers for participation in a cartel to fix prices.  The companies subject to the fines were Infineon, Philips, Samsung, and Renesas, a joint venture of Hitachi and Mitsubishi.  As the EC stated in its press release announcing the fines, “[i]nstead of competing, these companies colluded in order to coordinate their market behaviour throughout Europe.” 

These fines are the result of an investigation that was first made public on April 22, 2013, when the EC announced that it had “informed a number of suppliers of smart card chips of its preliminary view that they may have participated in a cartel, in breach of EU antitrust rules.”  The EC’s concerns were conveyed to the smart card suppliers by a statement of objections.  “A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules.  The Commission informs the parties concerned in writing of the objections raised against them.  The addressees can examine the documents in the Commission's investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities.”  The EC engaged in settlement discussions with the cartel members, but eventually broke off negotiations and elected to simply issue fines. 

The EC’s investigation uncovered contacts and meetings between the market participants to discuss prices, pricing trends, and production capacity.  These contacts were primarily bilateral and took place between September 2003 and September 2005.  The EC reported that the participants in the cartel were aware that their behavior was anticompetitive and illegal, as some of them made great efforts to conceal the collusion.  

Smart card chips are found in mobile phone subscriber identity module (“SIM”) cards, bank cards, transportation cards, ID cards such as passports, and a host of other applications.  In the phone market, smart card chips typically are used as memory to store phone numbers.  In the credit and ID card market, smart card chips are used as security measures to insure that data is kept confidential.  Smart card chips can also be used as electronic wallets.  The chip can be preloaded with funds to be used to pay for items from stores and for paying for other items, such as parking meters.  Smart card chips are particularly popular in Europe, but are also becoming more frequently used in America. 

The EC’s investigation was bolstered by the participation of Renesas, who came forward and revealed the existence of the cartel to the EC.  For its help, Renesas received immunity from the fines.  Samsung also assisted with the investigation and receive a 30% reduction of its fine. 

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October  2014 Events

Conferences and Educational Seminars


+September 30 - October 3, 2014

Illinois Public Pension Fund Association Midwest Pension Conference (IPPFA)

Grand Geneva Hotel

Lake Geneva, Wisconsin

“Preparing Pension Funds for Tomorrow”

The Illinois Public Pension Fund Association is available to more than 600 Police and Fire Pension Funds.  The original IPPFA, Illinois Police Pension Fund Association, was organized by a group of police trustees in 1985 for the education and protection of Police pension funds in Illinois. The Firefighters joined the group more than eight years later and the IPPFA became known as the Illinois Public Pension Fund Association.  The IPPFA educational programs are certified trustee programs and are offered throughout the year at various locations throughout the state.  Other IPPFA sponsored programs include regional seminars, referral programs, on-line training,  legislative support, and an annual conference, as well as financial support to all member families who have lost a police officer or firefighter in the line of duty.


+October 5 - 8, 2014

Florida Public Pension Trustees Association (FPPTA) Fall Trustees School

Hyatt Coconut Point

Bonita Springs, Florida

The FPPTA Certification Program for Public Pension Plan Trustees run by the FPPTA, the Florida Public Pension Trustee Association, is the premier training program and has become the model for funds and state organizations across the nation.  The goal of the CPPT program is to provide an educational setting that is conducive to the development of well-informed individuals so that they will be able to actively and meaningfully participate in the management of their retirement boards. Courses range from basic to advanced and are open to all, including service providers. The FPPTA also offers an annual conference at the beginning of summer where trustees are encouraged to bring their families.  The FPPTA has been in existence for almost three decades.  


+October 5-8, 2014

Massachusetts Association of Contributory Retirement Systems (MACRS)

The Sheraton Springfield

Springfield, Massachusetts

The Massachusetts Association for Contributory Retirement Systems (MACRS), which was established in 1937, is the only organization whose sole purpose is to preserve and strengthen the 106 public retirement systems of the Commonwealth. Collectively, MACRS represents the interests of over 350,000 active and retired employees.  MACRS conducts two statewide meetings each year featuring speakers, small group presentations, and roundtable discussions. In addition, each meeting is an important opportunity for informal exchange of ideas and information about retirement benefits. When important issues confront the retirement community, MACRS sponsors regional workshops to educate the members and to provide a forum for questions and debate.


+October 11-15, 2014

National Council on Teacher Retirement (NCTR)

JW Marriott

Indianapolis, Indiana


The National Council on Teacher Retirement celebrates it 92nd Annual Convention.  The NCTR is a national alliance of teachers, paraprofessionals, and service provider members which was created to meet the needs of its membership.  The annual convention is dedicated to serve as the national voice of concerns and issues that affect many facets of the teaching profession; from legislation, curriculum, and benefits to pension issues related to investments and economic policy, actuarial analyses, healthcare policies, and political affiliations. Meredith Williams, formerly of the Colorado Public Employees Retirement System, will be introduced as the new executive director. The National Teacher of the Year Award Dinner and address will be celebrated mid-conference.


+October 12-15, 2014

The International Foundation of Employee Benefit Plans’ (IFEBP) 60th Annual Employee Benefits  Conference

Boston Convention & Exhibition Center

Boston, Massachusetts

The Annual Employee Benefits Conference provides four days of education, roundtable discussions, and networking events.  Taft-Hartley and public sector fund trustees, administrators, business managers, and association leaders as well as service providers to the funds will be in attendance to learn the most recent reporting requirements, latest legislation, and legal developments in the pension fund and financial areas.  Fiduciary roles are growing in complexity as more legislation is enacted, such as the pension reform act which directly affects plans.  Continuing education credits will be earned for all sessions.


+October 20-21, 2014

National Association of Securities Professionals (NASP), New York Chapter, Trustee Education Conference

The New York Marriott at the Brooklyn Bridge

Brooklyn, New York

 The New York Chapter of the National Association of Securities Professionals presents the 18th Annual Trustee Education Conference.  For more than two decades, NASP has been the premier, non-profit organization advocating for women and people of color in the financial services industry since 1986. NASP’s annual Pension and Financial Services Conference has evolved into one of the industry’s most respected and influential educational forums.


.+October 25-28, 2014

121st Annual International Association of Chiefs of Police Conference and Law Enforcement Education Exposition and Technology Exposition

Orange County Convention Center

Orlando, Florida

Each year more than 10,000 law enforcement men and women take advantage of the IACP conference to advance their knowledge and careers. The conference provides a built-in network of valuable connections in several different areas of law enforcement, researchers, experts, and authorities in various specialized fields.  The level of professional development opportunities range from forums for first time attendees thru “masters programs” for lifetime attendees: all with the same goal of improving operations for the future.  The leadership and guidance participants receive at this 4 day conference is invaluable.


+October 25-29, 2014

National Pension Education Association (NPEA) 2014 Annual Conference

The Benson Hotel

Portland, Oregon

This is the 34th  Annual National Pension Education Association Conference.  This years conference once again includes topics on ethics, reporting and communicating under the “New Rules”, pension legal issues and legislative changes, as well as how to most efficiently use available technology and which technology is most user friendly for the tasks at hand. The conference will provide information to participants that empowers them to make better fiduciary decisions and encourage its members to work together to maximize opportunities in retirement investments


+October 26-29, 2014

The Public Safety Employees Pension & Benefits Conference (PSEP&BC) sponsored by NCPERS

Westin New Orleans Canal Place

New Orleans, Louisiana

For more than 30 years the Public Safety Employees Pension & Benefits Conference has been the premier  forum bringing together pension administrators, trustees, union leaders and representatives of the financial community to discuss issues related to retirement and other benefits for public safety employees.  As an affiliate of NCPERS this conference is the ideal venue to exchange information and learn examples of best practices and the latest strategies in investment and management.


+October 26-29, 2014

American Society of Pension Professionals & Actuaries (ASPPA)

Gaylord National Resort & Convention Center

National Harbor, MD

Education is one of ASPPA’s most important roles.  Its strategic plan and mission statement identify continuing education to its members as its primary purpose.  National and regional conferences are held throughout the year in various regions of the country.  Pension professionals from all aspects of the pension industry provide knowledge and leadership for retirement plan professionals. The 1,500 attendees will have their seminar choices from 70 (75 minute) workshops, offering up to 25 continuing education credits. More than 80 service providers have registered for the event.


+October 26-29, 2014

 11th Annual Public Pension Financial Forum 9th Annual Conference (P2F2)

 Sheraton Nashville Downtown

Nashville, Tennessee

Public Pension Financial Forum (P2F2) is the only professional organization specifically organized for and by public pension finance professionals.  It was designed so that all finance-related employees of public pension systems would have a forum that specifically provides a platform for professional growth, education, and networking. Nearly 100 different pension systems are represented by its 170 members. Members may earn up to 27 continuing professional education (CPE) units by attending this years conference.  P2F2 is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. 


+October 27-29, 2014

Family Office & Private Wealth Management Forum (produced by Opal Financial Group)

Napa Valley Marriott Hotels

Napa, California

 The Family Office and Private Wealth Management Conference will provide a forum for the free exchange of ideas concerning portfolio planning and investment strategies.  Rather than focusing on a particular investment style, this conference will tackle the issues that are most relevant to the nation’s endowments and charitable foundations by examining critical investment topics.  Participants and delegates will speak on a range of issues, including the necessity for corporate governance, methods of choosing money managers, problems of ethics,  liability in fiduciary planning, tax planning, and disbursement reporting.


+October 30, 2014

Connecticut Public Pension Forum (CPPF)

Waters’ Edge Conference Center

Westbrook, CT

The Connecticut Public Pension Forum (CPPF) is a not-for-profit association created to provide a formal setting of educational and related programs for all public retirement systems within the State of Connecticut.  The CPPF's primary objective is to provide continuing educational programs to public retirement systems through scheduled seminars and written and verbal communications.  The purpose of the seminars will be to provide objective research on specific issues of common interest and create resources for public retirement systems.  Additionally, the seminars will provide a forum for discussion on national and state issues of interest to public retirement systems.


Government Finance Officer’s Association Conferences


+ October 7-10, 2014

South Dakota Municipal League       

Spearfish holiday hinn Convention Center, Spearfish, South Dakota 



+October 8-10, 2014

Louisiana  GFOA        

Crowne Plaza, Baton Rouge, LA



+October 8-10, 2014

Ohio Municipal League

Sheraton Capital Square, Columbus, Ohio



+October 12-15 , 2014

South Carolina GFOA

Myrtle Beach Marriott, Myrtle Beach, South Carolina



+October 15-17, 2014

Iowa Municipal Finance Officers Association (IMFOA)

Holiday Inn Airport, Des Moines, Iowa     



+October 15-17, 2014

Tennessee GFOA

Embassy Suites Hotel and Convention Center, Murfreesboro, Tennessee



+October 20-22, 2014

Oregon Municipal Finance Officers’ Association

The Benson Hotel, Portland, Oregon



+October 22-24,  2014

Virginia GFOA          

The Hilton Richmond Hotel, Richmond, VA



+October 24, 2014

Maryland Government Finance Officers’ Association (MDGFOA)

BWI Marriott, Linthicum, Maryland



+October 24, 2014

Vermont Government Finance Officers’ Association Fall Workshop

Windjammer Inn and Conference Center, South Burlington, Vermont



+October 30-31, 2014

Municipal Finance Officers’ Association (MFOA) of Ohio

Marriott Northwest, Dublin, Ohio  



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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