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Mass Torts Update - Jan 5, 2015 8:08 - 0 Comments

Syngenta GMO Corn Class Actions Sent To Kansas Court

The Judicial Panel on Multidistrict Litigation (JPML) has agreed to consolidate in Kansas multiple class actions and lawsuits filed by corn farmers, grain exporters and others who accuse Syngenta Corp. of “tainting” the U.S. corn supply with genetically modified seed before China gave import approval. The JPML centralized approximately 177 suits over Syngenta’s decision to commercialize corn seeds with a genetically modified trait, known as “MIR162,” that gives the plants increased resistance to certain insects. The U.S. Department of Agriculture authorized the introduction of the trait in April 2010, by which time the U.S. Environmental Protection Agency (EPA) and the U.S. Food & Drug Administration (FDA) had already approved the trait, though the Chinese government has not yet approved it.

The panel said it chose the “readily accessible” district of Kansas largely because it could then be assigned to U.S. District Judge John W. Lungstrum, whom it said was “well-versed in the nuances of complex, multidistrict litigation.” The panel said in its order:

As with past litigation involving allegedly improper dissemination of genetically modified crops, centralization will eliminate duplicative discovery; avoid inconsistent pretrial rulings, particularly on class certification; and conserve the resources of the parties, their counsel and the judiciary.

Syngenta commercialized the trait for the 2011 growing season under the brand name “Viptera.” Syngenta misled farmers into believing that approval from China was imminent, but the trait remains unapproved. Syngenta’s premature release of Viptera corn cost the U.S. corn market somewhere between $1 billion and $3 billion due to the rejection and resulting seizures of U.S. containers and cargo ships transporting U.S. corn to China

Syngenta offered farmers a “side-by-side program,” which encouraged them to plant Viptera corn adjacent to other corn seed. But in so doing, the farmers risked co-mingling the GMO corn with the non-GMO corn, thereby making it likely that Chinese regulatory officials would reject U.S. shipments of corn. The U.S. Department of Agriculture determined that China purchased approximately 5 million tons of U.S. corn in 2012/13, making China the third-largest export market for U.S. corn. Since November 2013, however, Chinese imports for U.S. corn have decreased by an estimated 85 percent.

Source: Law360.com

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Nursing Home Update - Jan 5, 2015 8:52 - 0 Comments

Nursing Home Liabilities Transfer Can Be Considered Fradulent

The owners of a multistate chain of nursing homes may have committed fraud by transferring liabilities to a “shell company” that later lost more than $2 billion in jury verdicts to families who claimed relatives died of neglect. This was the stated opinion of a federal judge and an opinion the lawyers at Beasley Allen who handle nursing home cases agree with. U.S. Bankruptcy Judge Michael Williamson in Tampa, Fla., said last month that the owners of Fundamental Long Term Care Holdings LLC engaged in a “carefully orchestrated sham transaction” by selling a Trans Healthcare Inc. unit in 2006 to a retired graphic artist who didn’t even know he bought the company.

Fundamental Long Term Care Inc. (FLTCH) a Sparks, Md.-based company, kept the unencumbered assets of Trans Healthcare, while the other unit was saddled with the liabilities, including judgments in Florida that have never been paid over the deaths of four residents, according to a complaint by the residents’ families and the bankruptcy trustee for the company left holding the debts.

The transfer “bears all the hallmarks of fraud,” Judge Williamson said. The other unit, Trans Health Management Inc. (THMI) was “stripped of all its assets,” he said. Judge Williamson said in his tentative ruling that FLTCH and its affiliates have “successor liability” for judgments against THMI. Judge Williamson ordered FLTCH’s owners to mediation with the Plaintiffs. He said his findings are tentative and “can’t be used to establish liability.” He said he wouldn’t issue final findings until after the mediation. The individual lawsuits remain stayed until Judge Williamson reaches a final decision or they are resolved in mediation.

The Plaintiffs claimed that separating liabilities from assets is a common practice in the U.S. nursing home industry, used to insulate owners from possible judgments. Also sued were Trans Healthcare’s lenders, General Electric Capital Corp. and Ventas Inc., and its former principal owner, private-equity firm GTCR Golder Rauner LLC. It was alleged that these defendants aided an “effort to thwart potential claims.”

In the 2006 sale, FLTCH acquired all the stock of two Trans Healthcare entities, THI of Baltimore and THI of Nevada, keeping assets such as real estate and more than 100 nursing homes nationwide, according to the Plaintiffs. In a separate, linked transaction, THI sold all of its stock in THMI to Fundamental Long Term Care Inc., whose sole owner was retired graphic artist Barry Saacks, who at the time of the sale was living in a basement, Judge Williamson said, quoting from an e-mail introduced in the trial. Saacks said in sworn testimony for the lawsuit that he didn’t know he owned the company and didn’t put up any money for it. He said he had intended to buy THMI for its computer equipment.

GTCR principal Ned Jannotta conducted the sale in good faith, trying to save the chain from bankruptcy, Judge Williamson said. Jannotta didn’t know of plans to sell part of the company to Saacks, according to the judge. GTCR lost more than $60 million on its investment in Trans Healthcare, he said, adding “It was a financial disaster” for GTCR.

Source: Law360.com

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Fraud - Jan 5, 2015 9:08 - 0 Comments

$95 Million Settlement In Morgan Stanley MBS Suit Gets Court Approval

A New York federal judge signed off last month on a proposed $95 million agreement to settle and end a putative class action alleging Morgan Stanley & Co. misled institutional investors about shoddy subprime mortgage-backed securities. U.S. District Judge Katherine B. Forrest approved the settlement – tentatively put before the court in September – after noting that none of the 6,700 members of the potential class, led by a group of pension funds, had objected to the proposed allocation plan. She wrote:

The court hereby finds and concludes that the plan of allocation is, in all respects, fair and reasonable to the settlement class. Accordingly, the court hereby approves the plan of allocation proposed by the plaintiffs.

The suit arose from a complaint originally filed by MissPERS in December 2008 and consolidated in July 2009 with a similar suit filed by the West Virginia Investment Management Board, alleging securities fraud over the marketing and sale of various offerings of MBS pass-through certificates issued by Morgan Stanley Dean Witter Capital I Inc. and several Morgan Stanley mortgage loan trusts.

The pension funds accused the Morgan Stanley units of making misleading statements about lax underwriting standards regarding the creditworthiness of the mortgages underpinning the relevant MBS – purportedly poor subprime loans – and failing to warn investors of the potential risk involved in holding those certificates. A range of claims were tossed from the suit in August 2010, and the case was dismissed without prejudice in September 2011.

Then-presiding judge U.S. District Judge Laura Taylor Swain subsequently denied a motion in July 2012 bid by Morgan Stanley to dismiss the plaintiffs’ amended complaint. But in May the judge again trimmed the suit, dismissing several claims as time-barred, in the wake of a relevant Second Circuit ruling in June 2013. The parties then reached an in-principle agreement to settle in July.

The settlement applies to investors who acquired the relevant 2006 MBS certificates at issue before Dec. 2, 2008, or who acquired 2007 MBS certificates before May 7, 2009, and were damaged by those acquisitions.

Source: Law360.com

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